County would formally oppose Proposition 44 on the November ballot

In plain English

The Board is asked to formally oppose Proposition 44, the Clinic Funding Accountability and Transparency Act, which California voters will decide on November 3, 2026. As described in the staff report, the measure would require nonprofit federally qualified health centers and community clinics to spend at least 90 percent of their total revenue on a narrowly defined list of patient care activities, and would fine clinics that fall short. A yes vote would put the County on record against the measure and direct the Board Chair to send letters of opposition to Santa Cruz County's state legislative delegation.

Santa Cruz Community Health runs clinics in Santa Cruz, Live Oak, and Ben Lomond and cares for more than 13,000 residents, and it estimates a first-year penalty of about $2.47 million under the measure, which the report says could force service reductions for uninsured patients, Medi-Cal beneficiaries, working families, seniors, and veterans.

Key facts

Proposition 44 would require clinics to spend at least 90 percent of total revenue on a narrowly defined set of patient care activities, with financial penalties for falling short.
The measure qualified for the ballot in June 2026 and goes before voters on November 3, 2026.
Santa Cruz Community Health estimates a first-year penalty of approximately $2.47 million, based on its 2023 federal tax filing.
An analysis commissioned by the California Primary Care Association estimates clinics statewide could face as much as $1.7 billion in penalties in the first year.
The recommended action does not have a financial impact on the County; it was submitted by First District Supervisor Manu Koenig.

Reasons to support

The report says the 90 percent formula excludes functions that are integral to care — clinic administration, care coordination, insurance enrollment help, patient transportation, translation services, electronic health record systems, appointment call centers, referral coordination, patient navigation, and clinical leadership such as a chief medical officer — so clinics would be penalized for spending that supports patients.
The state's former Legislative Analyst has warned clinics might close, and that displaced patients using emergency rooms and other higher-cost settings could raise statewide health care costs by more than $1 billion.
Clinics are already subject to extensive federal and state regulation, strict reporting, and audits, and a majority of each clinic's governing board must be patients of that facility, so the report argues the added mandate brings no corresponding benefit to patients.

Reasons to oppose or change it

The measure is titled the Clinic Funding Accountability and Transparency Act, and its premise is that clinics receiving public funds should be required to direct most revenue to patient care and show it; opposing it means the County rejects that spending requirement and the state-administered measurement it would create.
The penalty figures driving the County's case come from the affected industry — an analysis commissioned by the California Primary Care Association and Santa Cruz Community Health's own estimate of its exposure — which some residents may see as interested parties.
Taking a position commits the Board and its Chair to lobby the county's state legislators on a question that voters themselves will settle at the ballot box on November 3, 2026.

Official wording

Adopt a position of opposition to Proposition 44, the Clinic Funding Accountability and Transparency Act, appearing on the November 3, 2026, statewide ballot, and direct the Board Chair to send letters of opposition to Santa Cruz County's state legislative delegation (Board of Supervisors - First District)

Official agenda Staff Report Draft-Chair letter of opposition to Prop 44 Clinic_spending_initiative Prop 44

Summary written by claude-opus-5 from the agenda and the Staff Report. It can contain mistakes. The official documents govern.