The Question

Should the State of California issue $1.5 billion in general obligation bonds to expand and improve the buildings and equipment at children’s hospitals?

The Situation

Children’s hospitals provide specialized physical and mental healthcare services to infants and children. There are eight private nonprofit hospitals, five University of California children’s hospitals, and more than 100 other nonprofit hospitals that serve children with complex chronic health conditions eligible for the California Children’s Services program. Over half the patients receive Medi-Cal benefits. Only a small amount of funding remains from the previous bonds and is expected to be used by mid-2018.

The Proposal

Prop. 4 would raise $1.5 billion through the sale of general obligation bonds and use the funds to improve and expand children’s hospitals. The money could be used to build new facilities, to improve and expand current facilities, and to purchase new equipment. To obtain funding a hospital would apply to the California Health Facilities Financing Authority of the State Treasurer’s Office, which would award the grants based on factors such as improving healthcare access and patient outcomes. The eight private nonprofit children’s hospitals would be eligible for 72% of the funds. The rest of the funds would go to University of California children’s acute care centers and to nonprofit hospitals that care for children eligible for governmental programs.

Fiscal Effect

The State would need to repay a total of $2.9 billion. The $2.9 billion is made up of the original $1.5 billion bond and $1.4 billion in interest to be paid back over 35 years. The yearly repayment amount is approximately $80 million.

A YES Vote Means

The state could sell $1.5 billion in general obligation bonds for the construction, expansion, renovation, and equipping of certain hospitals that treat children.

A NO Vote Means

The state could not sell the $1.5 billion in general obligation bonds proposed for these purposes.

Supporters Say

• Prop 4 helps over 2 million sick children each year and leads to better health outcomes.   
• Previous bonds have been used to add more beds and purchase new technology.

Opponents Say

• The bond would need to be repaid, potentially through higher taxes.
• We should first look at improving the entire healthcare system including lower costs.

Link to Official Support

http://www.yesonproposition4.org/ (website no longer in service)

Link to Official Opposition

At press time, there is no known formal campaign in opposition to this Proposition.