Proposition 44
The Clinic Funding Accountability and Transparency Act
What is it?
Prop 44 penalizes certain nonprofit health clinics that spend less than 90% of their revenue on their mission. The penalty equals the shortfall.
It covers nonprofit clinics that are federally qualified health centers, or FQHCs, plus "FQHC Look-Alikes" that meet the federal rules without getting an FQHC award. Tribal and urban Indian organizations are excluded, and so are hospitals and private practices.
Each covered clinic would send the Attorney General two numbers every year: what it spent on its mission, and its total revenue, both starting from figures the clinic already reports to the IRS. The Attorney General divides one by the other to get a "Mission Spend Ratio," then publishes it.
The 90% penalty
If a clinic's ratio comes in below 90%, the Department of Public Health charges a penalty equal to the whole gap: 90% of the clinic's total revenue, minus what it actually spent on its mission. The measure never states the 90% figure as a spending mandate. It enforces it through this penalty.
Penalty money goes into a state escrow account, and a clinic can ask the Department of Public Health for a waiver of the 90% requirement.
The measure's findings talk about clinic executive pay, but the operative sections do not cap or regulate pay. Executive pay counts against the ratio the same way any other non-program expense does.
Read the full annotated legal text →
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Fiscal impacts
The Legislative Analyst's Office and the Director of Finance estimate a state cost of up to the low tens of millions of dollars annually to enforce the requirement, much of it covered by fees and penalties on covered clinics. Recent tax data indicates most FQHCs currently spend less than 90% of revenue on mission-related expenses, so the penalty would apply widely. Other effects depend on how clinics respond: some might increase patient services, raising state Medi-Cal spending, while others might close, shifting patients to publicly operated providers. The net effect could range from limited to extensive.
Why is this on the ballot?
Prop 44 is a signature-gathered statewide initiative, filed with the Attorney General's office as Initiative 25-0008. It originated with SEIU-United Healthcare Workers West, which says it targets clinics that divert revenue away from patient care toward executive pay and overhead.
According to Article II, Section 8 of the California Constitution, citizens may introduce statutes (laws) by collecting signatures (5% of the votes cast in the most recent Governor's race). The statute must then be approved by voters with a simple majority of 50% + 1.
- Placed on ballot by: Signature-gathered initiative petition; qualified in May 2026.
- Official proponents: Shawna Brown and Sean Fleming, per Ballotpedia.
- Sponsor and funder: SEIU-United Healthcare Workers West (SEIU-UHW West), through its committee Californians for Responsible Healthcare.