Background
Children’s Hospitals. State law identifies eight private nonprofit hospitals and the children’s programs at the five University of California (UC) academic medical center campuses as “children’s hospitals.” Many children receiving services in these hospitals are from low-income families. Children’s hospitals receive funding from several sources. A majority of children’s hospitals’ funding comes from Medi-Cal in California, which provides health care coverage to low-income children in the state. Children’s hospitals also receive funding from commercial health insurance coverage, other government health care coverage programs, and private donations.
California Children’s Services (CCS) Program. The CCS program is a state-local health care coverage program that pays for specialized treatment and other services for children with complex chronic health conditions, including many children treated at children's hospitals. (Most children in the CCS program are also enrolled in Medi-Cal.) The state approves hospitals and other medical providers to receive payment for treating children in the CCS program. Other hospitals in California that are not specifically identified as children’s hospitals in state law also focus to varying degrees on children’s health care. For example, some hospitals have wings or centers that specialize in treating children. These hospitals are often approved to treat children in the CCS program.
Previous Children’s Hospital Bond Measures. Voters have previously approved two statewide measures that authorized the state to issue general obligation bonds to pay for capital projects at children’s hospitals. These bonds have been used for a variety of projects including the construction of new buildings and the renovation of existing buildings. In 2004, Proposition 61 provided $750 million in bond funding. In 2008, Proposition 3 provided $980 million in bond funding. Only the 13 hospitals specifically identified as children’s hospitals in state law are eligible to receive funds under these previous measures. 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.
Proposition 4 Proposal
Authorizes Additional Bonds for Children’s Hospitals. This measure authorizes the state to sell an additional $1.5 billion in general obligation bonds for capital improvement projects at (1) the 13 children’s hospitals and (2) other public or private nonprofit hospitals that treat children eligible for the CCS program. The measure provides 72 percent of the bond funds—roughly $1.1 billion—to the eight private nonprofit children’s hospitals. Each of these eight hospitals may apply for an equal share of this funding (see LAO analysis of Proposition 4 for eight private children's hospitals that would be elligible for the bond funds).
The measure provides 18 percent of the bond funds—$270 million—to the five UC children’s hospitals. Each UC children’s hospital may apply for an equal share of this funding. The measure makes available the remaining 10 percent of bond funds—$150 million—to roughly 150 other public or private nonprofit hospitals that provide services to children who are eligible for the CCS program. The measure does not set aside specific shares of this portion of bond funds for individual hospitals.
Source: LAO Analysis of Proposition 4
