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CHILDREN'S HOSPITAL PROJECTS GRANT PROGRAM
Bond Act. Initiative Statute

THE QUESTION

Should the state borrow seven hundred fifty million dollars ($750,000,000) through the sale of general obligation bonds, to be repaid from the state's General Fund, for construction, remodeling, furnishing and equipping children's hospitals?

BACKGROUND

Children's hospitals focus their efforts on the health care needs of children by providing diagnostic, therapeutic, and rehabilitative services to injured, disabled, and sick infants and children. Many children receiving services in these hospitals are from low-income families and have significant health care needs.

PROPOSAL

This measure authorizes the state to sell $750 million in general obligation bonds for capital improvement projects at children's hospitals. The measure specifically identifies the five University of California children's hospitals as eligible bond-fund recipients. There are other children's hospitals likely to meet the eligibility criteria specified in the measure, which include providing at least 160 licensed beds for infants and children. Figure 1 lists these children's hospitals.

For more information regarding general obligation bonds, please refer to the section of the ballot pamphlet or In Depth, entitled "An Overview of State Bond Debt."

The money raised from the bond sales could be used for the construction, expansion, remodeling, renovation, furnishing, equipping, financing, or refinancing of children's hospitals in the state. Eighty percent of the monies would be available to nonprofit children's hospitals and the remaining 20 percent would be available to University of California children's hospitals. The monies provided could not exceed the total cost of a project, and funded projects would have to be completed "within a reasonable period of time."

Children's hospitals would have to apply in writing for funds. The California Health Facilities Financing Authority (CHFFA), an existing state agency, would be required to develop the grant application. It must process submitted applications and award grants within 60 days. The CHFFA's decision to award a grant would be based on several factors, including 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 indigent, underserved, or uninsured; whether the grant would contribute toward the improvement of child health care or pediatric patient outcomes; and whether the applicant hospital would promote pediatric teaching or research programs.

FISCAL EFFECTS

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 this debt would be repaid. If the $750 million in bonds authorized by this measure were sold at an interest rate of 5.25 percent and repaid over 30 years, the cost to the state General Fund would be about $1.5 billion to pay off both the principal ($750 million) and the interest ($756 million). The average payment for principal and interest would be about $50 million per year. Administrative costs would be limited to CHFFA's actual costs or 1 percent of the bond funds, whichever is less. We estimate these costs will be minor.

WHAT A YES OR NO VOTE MEANS

A YES vote means the state could issue $750 million in general obligation bonds for construction, remodeling, furnishing and equipping children's hospitals.

A NO vote means the state would not be able to issue new general obligation bonds for construction, remodeling, furnishing and equipping children's hospitals.

SUPPORTERS SAY

• Proposition 61 will increase bed capacity in California's crowded children's hospitals so children who need critical care will have access to a regional facility.
• Proposition 61 allow children's hospitals to purchase the latest medical technologies and special equipment.
• Proposition 61 will not raise taxes.

OPPONENTS SAY

• California voters have already approved billions of dollars in bond debt this year. Additional borrowing now is not responsible.
• Rebuilding hospitals does not guarantee health care for any child. The current system should first be made more efficient.
• Proposition 61 does not address the fact that many children have no, or inadequate, health insurance coverage.

SUPPORT AND OPPOSITION

Official ballot arguments in support are signed by Trent Dilfer, Parent; Erika Figueroa, Parent; David Liu, Parent; Jennifer Hummer, Parent; and Debbie Cervantes, Parent

Official ballot arguments in opposition are signed by Gary B. Wesley, Attorney at Law

FOR MORE INFORMATION

Supporters

Charity Bracy, California Children's Hospital Association, (858) 974-1644, www.savethechildrenshospitals.com

Opponents

Gary B. Wesley, Attorney at Law, (408) 882-5070

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