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Note: The Background, Proposal, and Fiscal Effect sections are taken from the LWVCEF In Depth publication, based in part on the Legislative Analyst’s Office analysis included in the Secretary of State’s official Voter Information Guide. BACKGROUNDChildren’s hospitals provide specialized health care for sick, injured and disabled children. They provide care for many critically children and babies, often providing free or low-cost comprehensive care to indigent or public pediatric patients. The California Department of Finance projects a 35 percent growth in the state’s pediatric population over the next two decades. In November 2004, Proposition 61 authorized the sale of $750 million in general obligation bonds to provide funding for children’s hospitals. As of June 1, 2008, about $403 million of those funds had been awarded.
THE PROPOSALProposition 3 would authorize the state to sell $980 million in general obligation bonds, to be repaid from the state’s General Fund, to fund capital improvement projects at children’s hospitals. The funds could be used for the construction, expansion, remodeling, furnishing, equipping, financing or refinancing of the hospitals. Children’s hospitals must apply in writing for the funds to the California Health Facilities Financing Authority (CHFFA), an existing state agency. The CHFFA’s decision to award a grant would be based on specified factors, including whether the grant would contribute toward improving health care access for indigent or uninsured children and whether it would contribute to improving child health care outcomes. The measure specifies that 80 percent of the funds would be available, through grants of not more than $98 million each, to nonprofit children’s hospitals that meet specified requirements, including providing at least 160 licensed beds for infants and children. The Legislative Analyst’s Office estimates that eight children’s hospitals will qualify. The remaining 20 percent of the total funds would be available to the five University of California children’s hospitals (U.C. Davis, UCLA, U.C. Irvine, UCSF and UCSD), with each eligible for approximately $39 million. The bond funds provided to a hospital cannot exceed the total cost of the project, and funded projects would have to be completed “within a reasonable period of time.” FISCAL EFFECT
The cost of these bonds to the state would depend on the interest rates obtained when they were sold and the time period over which the debt would be repaid. If the $980 million in bonds authorized by this measure were sold at an interest rate of 5 percent and repaid over 30 years, the cost to the general fund would be about $2 billion to pay off both the principal ($980 million) and the interest ($933 million). The average payment for principal and interest would be about $64million per year. Administrative costs are estimated to be minor and would be limited to the CHFFA’s actual costs or 1 percent of the bond funds, whichever is less. LEAGUE POSITIONS AND DISCUSSIONThe League of Women Voters believes that caring for children is a societal as well as a family responsibility (LWVC Child Care position 1b). The LWVC also supports programs and policies that would effectively coordinate and integrate services that meet basic human needs, prevent or reduce poverty, and promote self-sufficiency for individuals and families (LWVC Children and Family Policy). Under the LWVUS position on Health Care, the League believes that a basic level of quality health care at an affordable cost should be available to all U.S. residents, and that every U.S. resident should have access to a basic level of care that includes the prevention of disease, health promotion and education, primary care (including prenatal and reproductive health), acute care, long-term care and mental health care. The League also believes that health care services could be more equitably distributed by allocating medical resources to underserved areas and providing for training health care professionals in needed fields of care, and that the ability of a patient to pay for services should not be a consideration in the allocation of health care resources. The LWVC State and Local Finances position on Long-Term Debt Financing favors the use of bond financing for public facilities and states that the League’s support of bond measures should take into account the state’s current bond rating and the impact of the measure on the ability to finance other projects; how the bond measure fits within debt management and infrastructure plans; and current urgent needs. Discussion The LWVC board of directors considered all of the positions above in reaching the decision to support Proposition 3. The need for hospital services to low-income and seriously ill children is critical, and current facilities are not adequate. While there will be an impact on the overall state financial picture of roughly $64 million per year from this measure, it is relatively minor. A concern issue related to the use of some of the bond monies for the purchase of equipment, which has a shorter lifespan than the life of the bonds, is also considered to be minor. The California Children’s Hospital Association (CCHA) states that it impossible for them to make the capital investment necessary for these hospitals without supplemental public support in the form of these bonds. The rebuttal to the supporters’ argument was signed by Lewis K. Uhler, President, National Tax Limitation Committee; Ted Gaines, California State Assemblyman; and James V. Lacy, Director, American Conservative Union. The signers of the ballot argument for Proposition 3 were also the signers of the rebuttal to the opponents’ arguments. Other supporters include the University of California Board of Regents; California Hospital Association; American Academy of Pediatrics, California; Children’s Defense Fund; Children Now; Children’s Partnership; Children’s Specialty Care Coalition; California Federation of Teachers; California Parent Teacher Association (PTA); Silicon Valley Leadership Group; California Democratic Party; Long Beach Chamber of Commerce; former Governor Pete Wilson and Gayle Wilson; State Treasurer Bill Lockyer; President pro Tempore-Elect Darrell Steinberg; and State Assembly Members Hector De La Torre, Jim Beall, and Sally Lieber. RESOURCESLinda Craig, LWVC Advocacy Director, legislation@lwvc.org Julie Rajan, LWVC Social Policy Director, social_policy@lwvc.org Barbara Inatsugu, LWVC Program Director for Education (PK-12), education_pk12@lwvc.org Jean Cohen, Chair, LWVC Working Party for Children Trudy Schafer, LWVC Senior Director for Program www.imaginewithus.org More information on Proposition 3 can be found on this campaign Web site. SUMMARY POINTS
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