Requires Community Health Clinics Spend 90% Of Revenue on Program Services

How it works

1. What kind of measure this is: Proposition 44 is a citizen initiative statute, not a constitutional amendment and not a legislative referral. The ballot pamphlet prints it as put on the ballot by petition signatures. The Secretary of State assigns it the number 44 for the November 3, 2026 general election, and the measure's own text names it the Clinic Funding Accountability and Transparency Act. Its subject is set out in the ballot label as requiring community health clinics to spend 90 percent of revenue on program services. Because it is an initiated statute, the Secretary of State's voter guide note and Ballotpedia both record that a simple majority vote is enough for approval, and Ballotpedia records that the initiative needed 546,651 valid signatures, equal to 5 percent of the votes cast in the last gubernatorial election.^S4S7S12
2. The path to the ballot: the University of California's Institute of Governmental Studies records that Proposition 44 began as Initiative 25-0008, filed by Shawna Brown and Sean Fleming in July 2025, that it received its official title and summary and was cleared for signature gathering in October 2025, that on May 18, 2026 the Secretary of State determined through a random sample that it had enough valid signatures to become eligible for the ballot, and that it was formally certified for the November 3, 2026 statewide ballot on June 25, 2026 and then designated Proposition 44. Ballotpedia gives the same sequence with exact dates: filed July 15, 2025, published and placed under review August 1, 2025, cleared for signature gathering October 8, 2025, and qualified May 18, 2026 with at least 634,061 of 1,030,848 submitted signatures determined valid through a random sample count. Ballotpedia also reports that the sponsors hired SEIU United Healthcare Workers West to collect signatures and that 16,857,372.16 dollars was spent to collect the 546,651 valid signatures required, a cost of 30.84 dollars per required signature.^S12S14
3. The four sections the measure adds: the text of the proposed law adds Section 12586.3 to the Government Code, which contains the definitions, the annual reporting duty, the Attorney General's guidance authority, the Attorney General's calculation and publication of the Mission Spend Ratio, the audit authority and the additional annual registration fee. It adds Section 1234.5 to the Health and Safety Code, which creates the Mission Spend Ratio Penalty Account in the Special Deposit Fund, the penalty assessment, the escrow, refund and appeal process, and the waiver process. It adds Section 5142.1 to the Corporations Code, which lets a patient of a qualifying clinic bring an action to enjoin, correct or otherwise remedy a breach of charitable trust. It adds Section 6814.1 to the Corporations Code, which makes knowing misreporting or routing through related parties a crime.^S7S12
4. Which clinics are covered: the measure defines a clinic as any clinic corporation, as defined in the Health and Safety Code, that is a federally qualified health center as that term is defined in Title 42 of the United States Code. The definition expressly includes FQHC look-alikes, meaning organizations that do not receive an FQHC award but are designated by the federal Health Resources and Services Administration as meeting FQHC program requirements. The definition excludes federally recognized Indian tribes, tribal organizations and urban Indian organizations, and any outpatient setting conducted, maintained or operated by such an entity. The Legislative Analyst describes the affected organizations as private nonprofit safety net clinics and states that there are about 2,000 safety net clinics in California, that most are private nonprofits and that the rest are run by public entities such as counties. Ballotpedia describes an FQHC as an organization that receives federal funds to provide prevention and primary services in an outpatient clinic setting in underserved areas, that is governed by a community board at least 51 percent of whose members are patients, that provides services on a sliding fee scale, and that is a Health Center Program award recipient or look-alike.^S2S3S7S12
5. The Mission Spend Ratio and how it would be calculated: the measure defines the Mission Spend Ratio as the total amount spent on activities that accomplish a clinic's exempt purpose divided by the clinic's total revenue. Each clinic would file annually with the Registry of Charities and Fundraisers the data needed to compute it, namely the sum spent on the clinic's exempt purpose, taken from the total program service expenses figure on line 4e of Part III of the clinic's Internal Revenue Service Form 990 for calendar year 2024 or the tax year beginning in 2024, and total revenue, taken from line 12 of Part I of the same form, both as adjusted under Attorney General guidance. When calculating the ratio, the Attorney General would exclude from both figures an amount equal to penalties paid, expenditures made under a plan agreed with the State Department of Public Health, and reimbursements received under Section 1234.5. The Attorney General is authorized to issue binding guidance on how to report the two figures, including additional reporting standards for related party transactions, and must issue findings stating its reasons when it issues guidance. The Attorney General would calculate each clinic's ratio no later than 90 days after receiving the clinic's submission, transmit the calculation to the clinic and to the Department of Public Health, and make the calculations publicly available on its website within 90 days of receipt. The Legislative Analyst states that the Attorney General would define which kinds of expenses relate to providing health care services and which are other expenses, using existing federal reports as a starting point.^S2S3S7S12
6. The reporting fine and the new registration fee: the measure directs the Attorney General to impose sanctions for failing to comply with the reporting provisions, in the form of an administrative fine of 5,000 dollars for a first violation and 10,000 dollars for each subsequent month in which a clinic fails to submit the required annual reports, which the Attorney General may periodically update for inflation. Each clinic would also submit an additional annual registration fee to fund the Attorney General's and the Department of Public Health's activities under the new sections, with a fee schedule adopted by the Attorney General in consultation with the Department of Public Health, adjusted annually to reflect actual costs, and capped at the amount necessary to cover the reasonable regulatory costs of administering the provisions. The official title and summary describes the same structure in one line, that penalties are imposed on nonprofit FQHCs that spend less than 90 percent of revenue on program services and that the Department of Public Health may waive spending requirements in exceptional circumstances.^S1S7S12
7. The penalty and what happens to the money: the Department of Public Health would annually assess on each covered clinic whose Mission Spend Ratio is below 90 percent an administrative penalty equal to the difference between the amount the clinic spent on mission-directed expenses and 90 percent of the clinic's total revenue, and would issue a notice of penalty within 30 days of receiving the Attorney General's calculation. A clinic that does not dispute the calculation pays in full within 30 days into the Mission Spend Ratio Penalty Account. Money in the account is held in escrow for five years, and during that time it is reimbursed to the clinics that paid it if the clinic comes into compliance with the 90 percent requirement and reaches agreement with the Department of Public Health on a plan to spend all of the reimbursed money on mission-directed expenses. The Department of Public Health may use money in the account to fund the activities required by the section, including maintaining the account and conducting the reviews needed for reimbursement, and may subtract those amounts from what is reimbursed. After five years, money not reimbursed is subject to appropriation by the Legislature for initiatives funding clinical worker training, recruitment and retention. A clinic that disputes the calculation must request an appeal to both the Attorney General and the Department of Public Health within 30 days of receiving the notice of penalty, and the appeal is heard under the Administrative Procedure Act.^S3S7S12
8. Waivers and the effective date: a clinic may apply to the Department of Public Health for a waiver that temporarily pauses the 90 percent requirement or substitutes an alternative ratio, on the basis of unexpected or exceptional circumstances or the clinic's economic condition. A waiver lasts one year from issuance and may be renewed, with renewal applications filed no later than 180 days before the existing waiver expires. To obtain a waiver based on unexpected or exceptional circumstances a clinic must detail when it learned of the circumstances, why it could not have anticipated them, what actions it took, the expenses incurred, when it expects them to be resolved and what preventive steps it is taking. To obtain a waiver based on economic condition a clinic must show that compliance would raise doubts about its ability to continue as a going concern, with documentation of its financial condition, that of any parent or affiliated entity, and the actual or potential direct financial impact of compliance, and the department is directed to consider factors including likely closure of facilities, patient services or programs, loss of jobs, whether facilities are small, rural or frontier, whether closure would significantly affect access to services in the region, and whether the clinic is in financial distress. The measure provides that the requirements apply to each clinic's first full fiscal year beginning at least six months after passage of the act.^S2S7S12
9. The patient lawsuit and the criminal penalty: the measure adds a section to the Corporations Code providing that, if a clinic either fails to report the required data or has a Mission Spend Ratio under 90 percent and is not under a waiver, any patient of that clinic may bring an action to enjoin, correct or otherwise remedy a breach of a charitable trust under the same procedures applicable to a claim under Section 5142. The measure provides that good faith shall not be a defense to such an action and that the business judgment rule shall not apply in any aspect to challenged breaches except as provided under Section 5239, and that the section is also subject to enforcement under the Business and Professions Code. It also provides that every director, officer or agent of a covered clinic who knowingly misreports expenditures or revenues or knowingly participates in a scheme to route expenditures or revenues through related parties, including related foundations, with intent to artificially increase the Mission Spend Ratio is punishable by imprisonment under the Penal Code or by imprisonment in a county jail for not more than one year. The official title and summary describes these as authorizing criminal charges for false reports or artificially increasing the spending ratio.^S1S7S12
10. Amendment, severability and competing measures: the measure states that it may be amended either by a subsequent measure submitted to a vote of the people at a statewide election or by statute validly passed by the Legislature and signed by the Governor, but only to further the purposes of the act. It states that its provisions are severable. It also contains a competing measures clause providing that if this measure and another measure governing the Mission Spend Ratio at some or all covered clinics appear on the same statewide ballot, the other measure is deemed to be in conflict with this one, that another measure is not in conflict merely because it adds or amends one or more of the same code sections, and that if this measure receives a greater number of affirmative votes it prevails in its entirety and the other measure is null and void.^S7
11. The background the Legislative Analyst gives on clinic spending: the analysis states that clinics are places where people can access certain health care services such as doctor's visits, that many clinics are considered safety net because they mainly serve low-income and uninsured people, and that the care they provide is often low cost or free. It states that private nonprofit safety net clinics in California report their revenues and expenses each year to the federal government and the state, that they currently report spending an average of about 80 percent of their revenue on providing health care services, and that the percent varies across clinics. CalMatters reports the same figure from the Legislative Analyst, that most clinics spend about 80 percent of revenue providing health services, although some spend less, and reports that community health clinics are nonprofits required by law to reinvest 100 percent of revenue back into the organization regardless of how voters decide on Proposition 44. The measure's own findings state that many clinics in California incur management and administrative expenses that are much higher than average, sometimes 30 to 40 percent of total revenue, while others spend less than 10 percent, that many clinics report annual surpluses as high as 20 percent of total revenue, and that clinic workers report chronic understaffing, high workloads and staffing turnover along with long patient wait times.^S2S3S7S11
12. The earlier legislative attempt and the lawsuits: Ballotpedia records that SEIU-UHW West has backed statewide and other ballot measures before, listing Proposition 29 and Proposition 23 on dialysis clinics and Proposition 8 on dialysis clinic refunds, all of which voters rejected, and Proposition 36, which it opposed. CalMatters reports that the union tried last year to get lawmakers to pass a bill that would have done nearly the same thing as Proposition 44 and that the bill died in committee. Ballotpedia reports that California Primary Care Association and Open Door Community Health Centers filed a lawsuit on April 30, 2026 in the United States District Court for the Northern District of California against Secretary of State Shirley Weber and SEIU-UHW West, arguing that the measure violated federal laws and regulations on spending requirements for nonprofit health clinics that serve low-income patients. CalMatters reports that a judge dismissed a previous lawsuit filed by the primary care association to keep the initiative off the ballot, and that the association and several clinics filed a complaint in September in the United States District Court for the Eastern District of California alleging that the union unlawfully offered to kill Proposition 44 in exchange for more union membership at clinics or for the association to withdraw its opposition to the union-supported billionaire wealth tax, that the association's general counsel called the arrangement extortion, and that a union spokesperson said the allegations were categorically false. These are the reported allegations and responses of the parties.^S11S12
13. What the measure does not do: it imposes no tax, fee or assessment on patients, residents or businesses, and it changes no state or local tax rate or base. It does not change what clinics are paid for care, and it does not change Medi-Cal, Medicare or private insurance rules or reimbursement rates. It does not change the requirement in existing law that nonprofit clinics reinvest their revenue in the organization. It does not itself require a clinic to close, cut services or reduce staff, and does not guarantee that any clinic's spending on patient services increases, because the result depends on how each clinic responds and on how the Attorney General defines qualifying expenses. It does not cover clinics operated by federally recognized Indian tribes, tribal organizations or urban Indian organizations. It does not apply to for-profit clinics, and the Legislative Analyst describes the requirement as applying to private nonprofit safety net clinics. Its requirements begin with each clinic's first full fiscal year beginning at least six months after passage, not on the day of the election.^S2S3S7S11

Fiscal impact

The Legislative Analyst's summary of the estimate of net state and local government fiscal impact is increased state costs in the low tens of millions of dollars per year to enforce the new requirements on certain private nonprofit health care clinics, covered by fees charged to the affected clinics.

The ballot label prints the shorter version, increased state costs in the low tens of millions of dollars per year, covered by fees. The analysis states that the state would enforce the requirements, including reviewing financial reports and investigating affected entities, and that the proposition directs the state to cover the costs by charging fees on affected clinics.

It states that the measure could create other costs for the state and local governments that are uncertain and depend on how the Attorney General would define health care-related expenses and whether affected clinics would meet the spending minimum, and gives examples: affected clinics might spend more on direct health care services to comply, which could increase state costs because some of those services would be for patients in Medi-Cal, the state's program that provides health care coverage for low-income Californians, or clinics that could not meet the minimum might close instead, which would create other uncertain effects on state and local costs.

The analysis gives no dollar estimate for those other costs. CalMatters and the Los Angeles Times report the same enforcement figure and note that clinics would pay annual fees to cover enforcement costs and that the proposition could incur additional state and local costs depending on the Attorney General's interpretation of what counts as a program expense.

The League of Women Voters of California Education Fund states that enforcing Proposition 44 could cost the state tens of millions of dollars each year, covered by fees on the affected clinics, that some clinics might increase patient services paid for by Medi-Cal, and that other clinics may cut back services or close if they cannot meet the new rules, in which case more patients may have to go to public hospitals or emergency rooms for care.^{S1S2S3S12S15S17}

How it could affect your household

Tradeoffs

• More mission spending against clinics' flexibility to run their organizations: the measure sets a floor of 90 percent of total revenue for spending that advances a clinic's exempt purpose and caps other spending at 10 percent, while the Attorney General decides which expenses qualify. The Legislative Analyst states that clinics currently report spending an average of about 80 percent of revenue on health care services, so the floor is above the current average and varies by clinic. Supporters state that the 90 percent can include medical visits, mental health and dental care, medications, equipment, transportation, language interpretation, care coordination, nurse managers and clinical staff, information technology and outreach, and that this directs more money to patient care. Opponents state that the requirement is unworkable, that it would restrict spending on nurse managers, physician leaders, translation, insurance assistance, community education, mammogram, X-ray and CT machines, information technology, renovations and new buildings, and that a fixed ratio could leave less flexibility to pay for management, technology, facilities and other costs needed to keep clinics running. The measure leaves the specifics to Attorney General guidance, which is authorized to be issued without further regulatory action.^{S2S3S5S7S12S13}
• Accountability and transparency against a new regulatory regime: supporters state that the measure increases transparency by requiring clinics to publicly report how health care dollars are spent, that it holds clinics and their executives accountable, and that hundreds of millions of dollars in the clinic system are not being spent on the core mission of patient care, and the measure requires the Attorney General to publish each clinic's Mission Spend Ratio within 90 days and to make its data public. Against that, the measure creates a new reporting duty, a new annual registration fee and a new calculation for every covered clinic, and it gives the Attorney General authority to define which expenses count, with the authority to implement that guidance by bulletin or notice rather than by regulation. Opponents state that the measure is unnecessary because clinics are already heavily regulated and audited by the federal and state governments and already report their revenue and mission spending to the Internal Revenue Service and the Attorney General, that it adds an expensive layer of bureaucracy, and that the vague wording could exclude vital services. The state's cost of running the new system is estimated in the low tens of millions of dollars per year, to be recovered from the clinics by fee.^{S1S2S3S5S7S12S15}
• Penalties that fall on the same clinics that serve low-income patients, with a refund path: the penalty is equal to the shortfall below 90 percent of total revenue, so a clinic that spends less on mission services pays more, and a clinic that spends more pays nothing. Money paid is held in escrow for five years and is refunded if the clinic comes into compliance and agrees to a spending plan; if it does not, the money is subject to appropriation by the Legislature for clinical worker training, recruitment and retention, so unrecovered penalties stay in the clinic workforce rather than in the general fund. Supporters state that clinics meeting the standard keep every dollar and that clinics that fall short can recover penalties by coming into compliance. Opponents state that most clinics would pay a collective 1.7 billion dollars in penalties in the first year and that this could leave 88 percent of clinics operating at a loss or nearly half of them closing, citing a study they commissioned; the Legislative Analyst gives no penalty estimate and says only that clinics might spend more on services or close and that the resulting state and local effects are uncertain.^{S2S3S5S7S11S15}
• Access to care against the intended effect on patient spending: the measure does not change funding levels, reimbursement rates or clinic eligibility, so the amount of public money flowing to clinics is unchanged by it. Whether patients gain or lose depends on how clinics reach the 90 percent threshold. The argument in favor states that the measure protects patient care and does not cut it, that clinics can include transportation, interpretation, care coordination, outreach, clinical staff, equipment, information technology and preventive care in their mission spending, and that reduced spending on excessive executive pay and overhead means more money for patients. The argument against states that the measure would cut billions from clinics every year, force clinics to shut down and cut services, and send more patients to hospital emergency rooms. The Legislative Analyst states that some clinics that could not meet the minimum might close and that other effects on state and local costs are uncertain. The measure also creates a right for patients of a covered clinic to sue for breach of charitable trust, which supporters present as an accountability tool and opponents present as additional legal exposure for clinics.^S2S3S5S7S14
• The measure's origin and the alignment of the sides: CalMatters reports that Proposition 44 is the second measure SEIU-UHW put forward this cycle along with the billionaire wealth tax, that the union tried and failed to pass nearly the same policy in the Legislature last year, that the union represents 120,000 health care workers and has used ballot measures to secure deals in Sacramento including a 25 dollar per hour health worker minimum wage in 2023, and that the California Primary Care Association and several clinics allege in a federal complaint that the union unlawfully offered to kill Proposition 44 in exchange for more union membership at clinics or for the association to withdraw its opposition to the billionaire tax measure, an allegation the union calls categorically false. Ballotpedia reports that a court dismissed the earlier lawsuit the association and Open Door Community Health Centers filed to keep the initiative off the ballot. CalMatters also reports the unusual alignment that opponents include groups representing clinics, doctors and hospitals along with the California Democratic, Republican and Working Families parties, while the sole supporting organization is a health care union. The voters guide summary page lists three opponents in its printed lineup and no submitted supporters.^S4S11S12
• Money on both sides, reported by sources that measure different things: the Secretary of State's compiled totals through 10/06/2026 report 10,781,565 dollars in contributions to the single committee formed to support the measure and 21,609,280 dollars to the single committee formed to oppose it. The Fair Political Practices Commission's top 10 contributors list reports 16,929,633.88 dollars in top aggregated contributions on the support side, all from one union political committee and marked because that contributor also gave to a committee covering more than one measure, and 17,445,089.12 dollars in top aggregated contributions on the opposition side, led by Altamed Health Services Corporation at 6,132,867.69 dollars. Ballotpedia reports 16,929,633.88 dollars in support and 37,616,354.92 dollars in opposition through September 19, 2026. CalMatters reports about 17 million dollars raised in support and about 37.6 million dollars in opposition and, on its campaign finance page sourced from the Secretary of State, 16.9 million dollars in support and 38.4 million dollars in opposition, with no reported independent expenditures on either side. The KQED voter guide, updated October 16, 2026, displays 16.9 million dollars in support and 38.5 million dollars in opposition. Ballotpedia also reports that 16,857,372.16 dollars was spent to collect the signatures that qualified the measure. A further reported difference: the Los Angeles Times states that Proposition 44 is one of two measures SEIU-UHW put forward this cycle, and CalMatters states the union's support committee money came mainly from union coffers.^{S8S9S11S12S13S15S18}
• Polling, reported as polling: Ballotpedia's table of 2026 polls on the measure records a Public Policy Institute of California poll of 1,103 likely voters conducted September 4 to 10, 2026 with 34.0 percent support, 61.0 percent opposition and 6.0 percent undecided, with a margin of error of plus or minus 3.8 percent. CalMatters reports the same survey finding that just one in three likely voters support the initiative. These are reported poll results, not predictions of the outcome.^S11S12

Sources

1. Proposition 44 Official Title and Summary (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
2. Proposition 44 Analysis by the Legislative Analyst (Official Voter Information Guide, November 3, 2026) California Secretary of State and Legislative Analyst's Office Accessed 2026-10-17
3. Proposition 44 [Ballot], Propositions on the November 3, 2026 Ballot Legislative Analyst's Office Accessed 2026-10-17
4. Proposition 44 summary page (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
5. Proposition 44 Arguments and Rebuttals (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
6. Quick Reference Guide – Proposition 44 (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
7. Proposition 44 Text of Proposed Laws, Official Voter Information Guide (the Clinic Funding Accountability and Transparency Act, adding Section 12586.3 to the Government Code, Section 1234.5 to the Health and Safety Code, and Sections 5142.1 and 6814.1 to the Corporations Code) California Secretary of State Accessed 2026-10-17
8. Proposition 44 – Requires Community Health Clinics Spend 90% of Revenue on Program Services. Initiative Statute., 2026 Ballot Measure Contribution Totals California Secretary of State (Cal-Access) Accessed 2026-10-17
9. Top 10 Contributors List, November 2026 General Election California Fair Political Practices Commission Accessed 2026-10-17
10. California voter guide: Proposition 44, healthcare spending, CalMatters California Voter Guide 2026 CalMatters Accessed 2026-10-17
11. The same union supporting a billionaire tax wants voters to limit clinic spending. Here's what to know about Prop. 44 (CalMatters, by Kristen Hwang, published October 7, 2026; read in the CalMatters republication by The Almanac, Embarcadero Media) CalMatters, republished by The Almanac (Embarcadero Media) Accessed 2026-10-17
12. California Proposition 44, Spending Requirements for Federally Qualified Health Centers Initiative (2026) Ballotpedia Accessed 2026-10-17
13. 2026 California Voter Guide: Proposition 44 KQED Accessed 2026-10-17
14. Proposition 44: Community Health Clinics, California Ballot Proposition Guides, November 3, 2026 General Election Institute of Governmental Studies, University of California, Berkeley Accessed 2026-10-17
15. California Proposition 44 election voter guide: Safety net health clinic spending, published October 1, 2026 Los Angeles Times Accessed 2026-10-17
16. 2026 General Election explainer: Proposition 44, Require more clinic spending on patient care (published September 23, 2026) KPBS Public Media Accessed 2026-10-17
17. Prop 44 (2026): 90% Health Care Spending for Nonprofit Safety-Net Clinics, CaVotes ballot measure guide League of Women Voters of California Education Fund Accessed 2026-10-17
18. Proposition 44 campaign finance detail, CalMatters 2026 Voter Guide (contributor and outside spending data from the California Secretary of State, updated October 9, 2026) CalMatters Accessed 2026-10-17