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Prop. 61Children's Hospitals: Facts & Analysis

Visit the no-spin zone for the who, what, and why of Proposition 61.

The Background

Children’s hospitals in California are feeling squeezed. Demand for their expensive specialty services is rising at a time when revenues that would help them expand and improve facilities and buy new medical equipment aren’t keeping pace.

Proposition 61, a $750 million bond measure on the November ballot, would finance… Read more »

Frequently Asked Questions




What is Prop. 61?
Prop. 61 authorizes $750 million in general obligation bonds to fund grants to eligible children's hospitals. Grants can be used for construction, expansion, remodeling, renovation, furnishing and equipping of children's hospitals, and can also be used to purchase new technology.

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Who funded the signature drive to get the initiative on the ballot?
The major contributors ($100,000+) funding the signature drive were: Loma Linda University Children's Hospital; Miller Children's at Long Beach Memorial Medical Center; Children's Hospital Central California; Children's Hospital and Research Center at Oakland; Children's Hospital of Orange County; Children's Hospital and Health Center San Diego; Children's Hospital Los Angeles; and Lucile Salter Packard Children's Hospital at Stanford.

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Who wrote the arguments for and against the initiative?
The argument in favor of the initiative was written by parents Trent Dilfer, Erika Figueroa, and David Liu. The argument against the initiative was written by Gary B.Wesley, attorney.

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How would Prop. 61 be paid for?
Funding would come from the issuance of a general obligation bond to finance the creation of the Children's Hospital Fund. Such bonds are a type of long-term borrowing; they are paid off from the state's General Fund, largely supported by tax revenues. These bonds must be approved by the voters and are guaranteed by the state's taxing power.

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Who would oversee the disbursement of funds?
The California Health Facilities Financing Authority (CHFFA), an existing state agency, will be responsible for managing funds.

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How would the funds be allocated?

The funds would be made available to two categories of hospitals:

Some $600 million (80 percent) would be made available to eligible nonprofit general acute care hospitals that focus on children with serious illnesses, with no more than $75 million going to any one hospital. The remaining $150 million (20 percent) will be distributed evenly between the five University of California general acute care children's hospitals, including:

  1. Mattel Children's Hospital at University of California, Los Angeles
  2. University Children's Hospital at University of California, Irvine
  3. University of California, San Diego Hospital Children's Hospital
  4. University of California, Davis Children's Hospital
  5. University of California, San Francisco Children's Hospital

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On what basis would grants be made?

In order to receive grants from the Children's Hospital fund, a hospital must provide clinical care, teaching, research and advocacy for children; have a minimum of 160 licensed beds dedicated to infants and children; be a provider of comprehensive services to a high volume of children eligible for government programs; provide over 30,000 total child patient days (excluding newborns) over a one-year period and offer medical training to at least eight full-time pediatric specialty or subspecialty doctors in their residencies.

Funds would pay for building, remodeling, renovation, furnishings, equipment, financing, and refinancing, based on the following considerations:

  1. Whether the grant contributes to expansion of or improvement to health care access by indigent, underserved, and uninsured children, and children eligible for governmental insurance programs
  2. Whether the grant contributes toward improving the results of care
  3. Whether the children's hospital provides services to vulnerable pediatric populations
  4. Demonstration of project readiness and project feasibility.

In addition to new project costs, hospitals may be reimbursed for costs incurred after January 31, 2003 that are included in the grant application and approved.

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Who supports Prop. 61?
The official sponsor is Susan Maddox, president and CEO of California Children's Health Foundation and California Children's Hospital Association (CCHA). CCHA advocates on behalf of the eight nonprofit children's hospitals expected to benefit from this bond measure, all of which were contributors to the initiative effort. CCHA also includes the five University of California medical center pediatric programs as associate members.

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Who opposes Prop. 61?
There is no known organized committee formed in opposition to Prop. 61.

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What are the projected costs of the measure, and who would pay?
Assuming an interest rate of 5.5 percent on a 30-year bond, the total cost would be $1.5 billion with interest costing $756 million on $750 million in principal. This is approximately $50 million per year. The administrative cost will be the lesser of the actual cost or 1 percent of the bond's fund. Costs are to be paid out of the state's General Fund.

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How would the bond affect the legislative budget process?
This bond measure covers capital improvements and related expenses, but not operating or administrative costs. The bond stipulates a minimum that can be appropriated on behalf of children’s hospitals; the legislature is free to appropriate more. However, the legislature cannot reduce the amount of funds that goes to paying off the bond. To that extent, the measure reduces legislative flexibility to achieve a balanced budget and may negatively impact other spending priorities.

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