Proposition 4 Could Boost Funding For California Children’s Hospitals

Leaders of California’s 13 regional children’s hospitals say the financial strain of more Medicaid patients and longer treatment times has made it harder to pay for infrastructure upgrades. Now, they're taking the issue to the ballot box.

If voters approve Proposition 4 this November, the state will put $1.5 billion in bond funding toward these improvements.

California Children’s Hospital Association President Ann-Louise Kuhns said each of the group's eight nonprofit hospitals spend $30-50 million a year on construction costs. She said about two-thirds of the patients they treat are on Medi-Cal, up significantly from a few years ago.

“Because the number has been increasing, it’s made it harder for us to close that gap in terms of making the necessary infrastructure improvements to our facilities,” she said.

She added that financing for children’s hospitals has gotten more difficult in recent years as more children with serious conditions survive and require treatment.

“Very premature infants that didn’t used to survive now can survive, but with a level of medical intensity that requires referral to our hospitals,” she said.

Those improvements include bringing hospital beds up to code. About 28 percent of beds in the eight nonprofit hospitals are not seismically compliant, according to a study by Kuhns’ organization. Other hospitals need to modernize the designs of their neonatal intensive care units, or invest in new equipment.

These eight hospitals would get 72 percent of the bonds. Another 18 percent would go to five children’s hospitals affiliated with the University of California system, and the remaining 10 percent would go to public and private hospitals who serve pediatric patients through the California Children’s Services program.

The hospitals and their supporters had raised over $11 million as of Oct. 18 to pass the measure, which would authorize the state to borrow money for these construction projects.

An analysis from the nonpartisan Legislative Analyst’s Office estimates the bonds will gain about $1.4 billion in interest. The state can pay the total of $2.9 billion off in $80 million annual increments over the next 35 years using general tax revenues.

This amount is less than one-tenth of 1 percent of the state’s current general fund budget, according to the office’s analysis of the measure.

There is no funded opposition to the measure, though California resident Gary Wesley wrote the argument against it in the voter registration guide, citing concerns that the bond repayments would affect property taxes. The fiscal analysis does not suggest property taxes will increase.

Kuhns said using a bond allows children’s hospitals to do more long-term planning than they could by passing a bill.

“The budget process is a year to year process, and these large infrastructure projects are multi-year projects,” she said.

This is the third bond measure that the children’s hospital association has put on the ballot for infrastructure improvements — two bonds for $750 million and $980 million passed in 2004 and 2008, respectively.