Children's hospitals bring their third California bond measure

LOS ANGELES — California's children's hospitals — two time winners at the statewide ballot box — are back for a third time.

Their Proposition 4 would authorize $1.5 billion in state general obligation bonds for 13 children's hospitals around the state, most of them private nonprofits.

BB-101918-TREND

The children's hospital lobby placed the measure on the ballot by gathering petition signatures.

The campaign organization for the hospitals paid $2.6 million for signature gathering during 2018, according to campaign finance reports filed with the Secretary of State. It's also reported spending $5.8 million through Sept. 22 for a TV ad campaign.

It's a small price to pay for a $1.5 billion state funding payoff. The strategy has worked before; voters approved $750 million in 2004 and $980 million in 2008 for bonds to support children's hospitals.

The measure enjoys high-profile endorsements: among them is Los Angeles Mayor Eric Garcetti, who organized a press event Tuesday to tout Prop. 4, which would dole out the money over 15 years for infrastructure upgrades, hospital expansions, and medical technology at the 13 children's hospitals, including five in the University of California system.

The measure is on the Nov. 6 ballot along with Prop. 1, a $4 billion affordable housing bond; Prop. 2, a measure to authorize $2 billion of bonds for supportive housing for mentally ill homeless people to be backed by an existing surtax to support mental health programs; and Prop. 3, an $8.9 billion water bond. They need a simple majority to pass.

“Proposition 4 will give our children’s hospitals important resources to ensure kids get the highest level of care and treatment,” Garcetti said. “We’re fortunate to have one of these premier hospitals right here in Los Angeles, making this an easy choice."

The children’s hospitals provide specialized care for children and young adults up to age 21 who suffer from serious and life-threatening conditions. They treat all kids, regardless of a family’s income.

The measure would provide 72% of the bond funds—roughly $1.1 billion—to the eight private nonprofit children’s hospitals. Each of these eight hospitals may apply for an equal share of this funding. Five UC children's hospitals would receive $270 million. The remaining $150 million would go to roughly 150 other public or private nonprofit hospitals that provide services to children who are eligible for California Children's Services, a state program for children with certain diseases or health problems. The measure does not set aside specific shares of this portion of bond funds for individual hospitals.

The $1.5 billion bond measure would be repaid from the state general fund and cost taxpayers $2.9 billion, or about $80 million a year, over the next 35 years, according to the state Legislative Analyst's Office.

“We are so grateful to have support from Mayor Garcetti, a leader who appreciates and understands the value of investing in children,” said Paul Viviano, president and chief executive officer of Children's Hospital Los Angeles. “Prop. 4 will help Children’s Hospital Los Angeles and all of California’s children’s hospitals continue to provide life-saving care for millions of children annually.”

The measure is also supported by Democratic gubernatorial candidate Gavin Newsom, Los Angeles County Supervisors Janice Hahn and Sheila Kuehl, former Los Angeles Mayor Antonio Villaraigosa and the Los Angeles Area Chamber of Commerce.

The League of Women Voters of California has come out against the children’s hospital bond.

“State funds should not be used to support private facilities,” according to a League statement. “This principle stands even when, as is the case in this measure, the facilities serve severely ill children.”

The League supports both housing bond measures, but also opposes the water bond. As with Prop. 4, the water bond reached the ballot through a signature-gathering process. Propositions 1 and 2 were referred by the Legislature.

The League says while it supports the use of long-term debt to finance capital projects, the water bond measure has a number of fatal flaws.

“It is essential that California manage and develop water resources in ways that benefit the environment, and that the environmental focus emphasizes both conservation and use-appropriate high water quality standards,” the League wrote in its ballot measure recommendations. “However, this bond is not the way to accomplish those goals.”

Among the flaws listed were that the bond measure would shift the cost of water from the end users to California taxpayers; reduce state money available for other critical state programs like education, affordable housing, and healthcare; and fail to provide for adequate project oversight and financial accountability.

Prop. 4 will allow Children's Hospital Los Angeles to add beds and continue to ensure it has the most state-of-the-art equipment for patient care, said Yusef Robb, a Garcetti spokesman.

If children are treated for health problems they experience in their youth, it lowers costs down the road when they become adults, he said.

“The demands on our children’s hospitals are increasing and community hospitals are either not equipped to serve the specialized needs of children, or are choosing to not offer those services, because of the high quality of care provided by our regional children’s hospitals,” Robb said.

Trendlines indicate that children’s hospitals will soon exceed current capacity; and there is no alternative than to do everything we can to support these healthcare facilities, he said.

“There is population growth," Robb said. "There is a shift from children community hospitals to regional children’s hospitals and advances in healthcare save lives, but cost more."

Los Angeles Mayor Eric Garcetti and a Children's Hospital Los Angeles patient on Oct. 16, 2018, when the mayor announced his support for a state bond measure for children's hospitals.
HANNAH BENET

Though $1.5 billion seems like a small amount to help fund 13 hospitals, Robb said that California is fortunate as voters have previously twice approved other measures to help children’s hospitals. The additional funding is needed to address a current gap, he said.

“Our children’s hospitals are very aggressive about philanthropic fundraising,” Robb said. “We want voters to understand that these aren’t entities that are simply waiting for tax dollars to fall into their lap. If you go to Children’s Hospital Los Angeles you will notice all of the hospital’s buildings our named after donors. But gaps exist. More and more children are coming through the doors.”

The number of patient visits at CHLA grows by about 20,000 each year, according to Garcetti's office.

The mayor also supports the bond measure, because in comparison to some other “politically fraught” bond measures, supporting funding for the children’s hospital is something that is “simply good," Robb said.

“It is really about our kids,” Garcetti said. “The health conditions faced by the children in these hospitals is expertly managed. The patient loads are twice as high as the average hospital, but they are still making it work. This is an investment that will be well managed.”

For reprint and licensing requests for this article, click here.
Bond elections Not-for-profit healthcare State budgets State of California California
MORE FROM BOND BUYER