BILL ANALYSIS �
AB 2418
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2418 (Gordon) - As Amended: May 1, 2012
Policy Committee: HealthVote:10-6
Local Government Vote: 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill requires health care districts (HCD) to spend 95% of
tax revenue on current community health care benefit, as
defined, and limits to 30% the amount of annual revenue that can
be allocated to reserves. Specifically, this bill:
1)Defines current community health care benefit as any of the
following:
a) The operation or maintenance of various health care
facilities or services pursuant to existing law.
b) Reserves.
c) Capital outlays pursuant to existing law.
d) Any other item approved by a resolution adopted by a
majority vote of the local agency formation commission
(LAFCO) of the "principal county of the district."
1)Excludes salaries and benefits paid to district staff or board
members, payments made to consultants, and any other activity
not specified as current community health care benefit, from
its definition.
2)Defines "principal county of the district" as the county in
which the district is located or, if located in more than one
county, as the county with the largest share of assessed value
of taxable property within the district.
3)Does not apply to contracts obligated as of April 1, 2014,
portions of a district's tax levy that are required to be used
for a specific purpose, financial reserves as of April 1,
2014, the cost of special elections, or special assessments.
AB 2418
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4)Requires districts to annually submit documentation of
compliance to the county auditor-controller, the local agency
formation commission, and the board of supervisors, of the
principal county of the district.
FISCAL EFFECT
State-reimbursable mandate costs in the hundreds of thousands of
dollars to low millions GF, for health care districts to ensure
compliance with the 95% minimum threshold for current community
health benefit. Compliance with this requirement is a new
state-mandated duty for local agencies.
COMMENTS
1)Rationale . This bill intends to ensure that taxpayer dollars
collected by local health districts provide real health
benefit to the communities they serve. According to the
author, 14 of 73 HCDs do not directly operate any health care
facilities. He contends these districts have few restrictions
on how they spend their share of property taxes, originally
intended to fund hospital construction and operation, and some
districts have engaged in activities with no direct or
indirect impact on community health. The authors believe AB
2418 strikes a careful balance, providing a statewide
framework for additional accountability, while retaining
flexibility at the local level.
2)Support . SEIU California, Health Access, and San Mateo County
Supervisor Don Horsley support this bill. SEIU indicates that
there is a need for stricter standards for HCDs, especially
those which have shed their hospitals.
Horsley states neither HCD in San Mateo County currently
operates a hospital nor provides any direct medical care.
Health Access indicates Peninsula Health Care District refused
to provide resources to help care for local uninsured
residents in San Mateo County, and that Beach Cities Health
Care District in Los Angeles holds $30 million in reserve and
provides no direct health care.
3)Opposition . HCDs and the Association of Health Care Districts
oppose this bill as a solution in search of a problem, and
disagree that this approach will benefit the communities they
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serve. Individual HCDs cite their unique circumstances in
terms of geography, resources, community role, and day-to-day
operations to demonstrate this bill will impact their ability
to deliver services. Many districts believe the bill is
unworkable. For example, Grossmont Healthcare District in La
Mesa indicates it is one of a few districts with
voter-approved bonds financing significant improvements at the
publicly-owned hospital, and appropriately spends a
significant portion of their revenues to administer
bond-related activities.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081