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 →