Proposition 4, on the November ballot as an initiated state statute, authorizes the state to sell $1.5 billion in general obligation bonds for the construction, expansion, renovation and equipping of certain hospitals in the state that treat children.
This is the third bond measure in 14 years dedicated to children’s hospitals in California. The previous measures, Prop 61 in 2004 and Prop 3 in 2008, were launched by the California Children’s Hospital Association, as is this measure.
The two previous measures provided $1.7 billion in bond funding benefiting eight private nonprofit children’s hospitals and five University of California children’s hospitals. According to the nonpartisan Legislative Analyst’s Office, “As of May 2018, most of the funding from the previous two measures had been committed to projects, with the remaining funds expected to be fully committed by the end of summer 2018.”
Those previously benefitted private hospitals — Children’s Hospital and Research Center in Oakland; Children’s Hospital of Los Angeles; Children’s Hospital of Orange County; Earl and Loraine Miller Children’s Hospital in Long Beach; Loma Linda University Children’s Hospital; Lucile Packard Children’s Hospital at Stanford; Rady Children’s Hospital in San Diego; and Valley Children’s Hospital in Madera; and UC hospitals Matte Children’s Hospital at UCLA; University Children’s Hospital at UC Irvine; UC Davis Children’s Hospital; UC San Diego Children’s Hospital and UC San Francisco Children’s Hospital — also are eligible for funding under this measure. Seventy-two percent of bond funds ($1.1 billion) are designated for capital improvement projects at the eight private nonprofits; and 18 percent of the bond funds, roughly $270 million, go to the UC system children’s hospitals.
What is different with Prop 4 is that 10 percent of total funding is allocated to other public and private hospitals that provide pediatric services to children eligible for California Children’s Services — a state/local healthcare-coverage program for children with complex chronic health conditions.
The measure allows for funds to be used for various capital improvement projects, including “construction, expansion, remodeling, renovation, furnishing, equipping, financing or refinancing of eligible hospitals in the state.”
Children’s hospitals eligible to receive funds under Prop 4 would apply for them to the California Health Facilities Financing Authority and existing state agency. CHFFA would decide whether or not to award a grant based on whether, “The grant would contribute toward the expansion or improvement of health care access for children who are eligible for governmental health insurance programs or who are low income, underserved or uninsured; would contribute to the improvement of child health care or pediatric patient outcomes; and whether the applicant hospital would promote pediatric teaching or research programs.”
The LAO estimates the cost to taxpayers to repay the bonds (principal of $1.5 billion and interest of $1.4 billion) would average “$80 million annually over the next 35 years. This amount is less that one-tenth of 1 percent of the state’s current General Fund budget. Administrative costs, paid from the bond funds, would be limited to CHFFA’s actual costs or 1 percent of the bond funds whichever is less.”
The “Yes on Children’s Hospital” sponsored by the California Children’s Hospital has spent $10.9 million to fund the path to the ballot. There has been no opposition funding.
Similarly, there have been no media editorial arguments against passage. In support, the Los Angeles Times observes,” It’s lamentable that children’s hospitals have to keep coming back to voters for help with their capital expenses, but it’s a direct consequence of the state’s low MediCal reimbursement rates.”
Measure supporters include the California Teachers Association; James Stein, a pediatric surgeon; Maria Minon, chief medical officer of Children’s Hospital of Orange County; and Roberto Gugig, a pediatric gastroenterologist who wrote supporting arguments including: “Over two million times a year, seriously ill children receive highly specialized care in a California children’s hospital for complex medical conditions and life threatening diseases including cancer, sickle cell and cystic fibrosis — no matter what a family can pay.” Authors also note, “The State Treasurer’s Office administers all state bond funds but testified to the Senate and Assembly Health Committees that ‘this program in particular has been very successful.’”
In opposition, Elizabeth Wall Ralston, former president of the League of Women Voters of Los Angeles, said, “This measure is intended to primarily benefit the same hospitals that are funding the ‘yes’ campaign. It bypasses the legislative process, which is a better way of determining how taxpayer dollars should be spent. The proponents of a ballot measure should bear the burden of explaining why it is worthy of support — given the full cost, available alternative and other needs and wants.”
