California Prop. 44: What To Know About Community Clinic Spending Measure

Proposition 44, a union-backed measure on the November ballot, aims to make sure federally funded community clinics spend the vast majority of funding on care-oriented services as opposed to expenses such as executive compensation.

California has over 1,000 Federally Qualified Health Centers, community clinics that provide comprehensive care to roughly 6 million patients each year on a sliding scale based on their ability to pay. These clinics face an uncertain financial future, especially after a federal budget law signed by President Donald Trump is expected to eventually cost California roughly $30 billion a year in federal funding, according to state estimates.

Supporters of a Proposition 44 hope to mitigate those cuts by ensuring that the vast majority of community clinic funds are earmarked for “program services,” as opposed to executive compensation, overhead, or other costs that supporters deem non-essential.

Yet a coalition that includes the California Democratic Party, the California Medical Association, and the California Hospital Association believes that such a mandate would create undue burdens on vulnerable clinics. Supporters believe that in view of cuts, “every healthcare dollar matters more than ever.”

Proposition 44, also known as the Clinic Funding Accountability and Transparency Act, would require nonprofit FQHCs to spend at least 90 percent of their total annual revenue on program services “advancing their charitable purpose,” according to the proposition text.

The proposition would give the California attorney general the authority to issue guidance regarding what constitutes qualifying spending. If a clinic falls short of the 90 percent requirement, it would be penalized by its shortfall - in other words, if a clinic is required to spend $90 million of its $100 million revenue on qualifying expenses, and only spends $82 million, it would be penalized $8 million. If the clinic comes back into compliance within five years and can demonstrate that it spends at least 90 percent on qualifying expenses, the money will be returned. If not, the money will remain with the state and will be used for clinic worker training, recruitment, and retention.

Clinic personnel found falsifying their records could face criminal charges.

The proposition was proposed by the Service Employees International Union-United Healthcare Workers West union in August 2025, when the union was trying to organize more workers at community health clinics, according to a Politico report. California Primary Care Association CEO Francisco Silva told Politico that he and SEIU-UHW President Dave Regan negotiated a potential agreement that the union would withdraw the Prop. 44 ballot measure if clinics made it easier for workers to organize.

Regan said that the clinics made a last-minute proposal as the deadline to withdraw Prop. 44 approached, which he rejected. He argued that the ballot measure was separate, and not used as a bargaining chip.

The negotiations failed, and the proposition got enough signatures to qualify for the ballot, according to Politico.

The proposition has drawn a polarized reaction. Supporters say it will help prevent waste, and ensure that clinic revenue is used mostly to help patients. SEIU-UHW said that the bill is largely aimed at items like “excessive CEO pay, lavish events, bloated overhead, and other spending that takes resources away from the clinic’s core mission of caring for patients.”

SEIU-UHW pointed out that AltaMed Health Services reported paying its president and CEO nearly $1.93 million in 2024, while DAP reported a net loss of about $879,000 from fundraising events in its fiscal year 2023 federal tax filing.

They also claim that the definition of “program services” is broad, and can include language services, community outreach, transportation, and “anything that helps a patient access the care they need.”

“This is simply about transparency and accountability in our community clinic system. More than any other healthcare facilities, community clinics are funded by our tax dollars, which means they have an added responsibility to ensure those funds are used responsibly and for the core mission of the clinics,” SEIU-UHW spokesperson Renée Saldaña told Patch in an email. “By curbing wasteful spending, the measure frees up more money for exactly that care…

A union of frontline healthcare workers did not write a measure to defund its own patients.”

But many opponents fear that’s what might happen. An analysis commissioned by the California Primary Care Association estimated that clinics could face about $1.7 billion in first-year penalties if their spending patterns did not change. Clinics might also need to spend additional funds to ensure compliance with the measure. As a result, 88 percent of clinics across the state would operate at a loss, according to Berkeley Research Group’s analysis of clinics that accounts for the measure’s penalties.

The No on 44 campaign argues that the financial strain could force hundreds of clinics to close, though the Legislative Analyst’s Office does not estimate how many clinics could close and says the measure’s effects are uncertain.

“These measures couldn’t have come at a more precarious time for health care in California,” said Carmela Coyle, president and CEO of the California Hospital Association. “Following the largest cut to health care in our nation’s history, this is a moment when the state should be doing all it can to recruit and retain thoughtful, mission-driven leaders who can develop innovative ways to preserve access to vital health services for patients. Instead, this proposal will only make it difficult — if not impossible — to do so."

However, supporters argue that clinics could recoup penalty costs if they come into compliance. “This measure does not cut clinic funding or reduce services patients rely on. Clinics that meet the standard keep every dollar, and even clinics that fall short can recover any penalties by coming into compliance. Unrecovered penalties, if any, are redirected to recruiting, training, and retaining the healthcare workers our clinics desperately need. Every dollar stays in the healthcare system—prioritized for patient care instead of excessive overhead,” the Yes campaign said on the Secretary of State’s voter guide.

The two sides also disagree on what would constitute “program services.” Supporters’ official ballot argument says that it can include a broad array of services, including equipment, transportation, language interpretation, and community outreach. Opponents argue that none of that is guaranteed, because it is ultimately up to the attorney general to issue guidance defining qualifying expenses, and use clinics’ existing federal financial reports as a starting point.

Form 990, an IRS return filed by tax-exempt organizations, divides expenses into categories of “program services,” “management/general,” and “fundraising.” Several items, including patient accounting and billing, human resources, general legal services, and office management, are classified as “management/general,” and this could mean they would not count toward the 90% spending requirement. If so, clinics could need to cut back on them, or increase spending elsewhere in order to comply.

“Prop 44 puts the State Attorney General - an elected politician with no healthcare experience - in charge of decisions about the services health clinics can provide. The last thing we need is politicians to interfere in decisions that should be between patients and their doctors, and nurses,” said No On Prop 44, a large coalition of numerous healthcare associations, districts, and community clinics.

Opponents also argue that clinics are already not-for-profit organizations answering to boards required to include patients and the wider community they serve. Most FQHCs are governed by the Federal Health Center Program, which requires at least 51 percent of the governing board to be patients of the health center. Non-patient members must represent the community they serve, and no more than half of non-patient members can derive more than 10 percent of their income from the health care industry. Clinic employees and their immediate family members cannot serve on the board.

The Legislative Analyst’s Office, a nonpartisan government agency providing fiscal and policy advice to the California Legislature, says nonprofit clinics currently report spending an average of about 80% of their revenue on health care services, though that varies by clinic.

Still, supporters argue that some clinics have reported far less in qualifying spending, so an enforceable minimum is necessary. Prop. 44 supporters argue that some clinics spend less than half their funding on patient care and services, and as a result, patients wait months for appointments, and workers struggle with staffing shortages, outdated equipment, and limited resources.

Political contributions from top supporters to both sides of the measure are roughly equal, though polling is not. According to the California Fair Political Practices Commission, the measure’s supporting committee reported nearly $16.93 million from SEIU-UHW Political Issues Committee among its top contributors as of Sept. 15. The opposition committee reported about $16.71 million from top contributors, including AltaMed Health Services and entities affiliated with the California Primary Care Association. A September survey from the Public Policy Institute of California found that 34% of likely voters said they would vote yes, 61% said they would vote no, and 6% said they were undecided.