Submitted July 17, 2008
Proposition 3
Children's Hospital Bond Act.
Grant Program. Statute.
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.
Proposition 61, which voters approved at the November
2004 statewide general election, authorized the sale of $750 million in general
obligation bonds to provide funding for children’s hospitals. The eligibility
criteria for hospitals to receive funds under Proposition 61 is the same under
this measure. As of June 1, 2008, about $403 million of the funds from
Proposition 61 had been awarded to eligible hospitals.
Proposal
This measure authorizes the state to sell $980 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 additional
children’s hospitals that are likely to meet other eligibility criteria
specified in the measure, which are based on hospitals’ performance in the
2001‑02 fiscal year. These criteria include providing at least 160 licensed beds
for infants and children. Figure 1 lists these children’s hospitals.
Figure 1
Children’s Hospitals Eligible for Bond Funds |
Specifically Identified as Eligible—20
Percent of Total Funds |
Mattel Children’s Hospital at University of
California, Los Angeles |
University Children’s Hospital at University
of California, Irvine |
University of California, Davis Children’s
Hospital |
University of California, San Diego Children’s
Hospital |
University of California, San Francisco
Children’s Hospital |
Likely to
Be Eligible Hospitals—80 Percent of Total Funds |
Rady Children’s Hospital, San Diego
(formerly Children’s Hospital and Health Center, San Diego) |
Children’s Hospital Los Angeles |
Children’s Hospital and Research Center at
Oakland |
Children’s Hospital of Orange County |
Loma Linda University Children’s Hospital |
Lucile Salter Packard Children’s Hospital at
Stanford |
Miller’s Children’s Hospital, Long Beach |
Children’s Hospital Central California |
|
For more information regarding general obligation bonds,
please refer to the section of this ballot pamphlet 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 $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 state 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 $64 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.
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