Assembly Bill 108, introduced May 4, became law last week after passing both chambers in three days. Newsom signed it within hours, and the Department of Health Care Access and Information set a one-week application window that closed Monday. The recipients are to be announced May 26.
The bill provides grants to public and nonprofit hospitals that have less than 10 days of cash on hand and serve a patient base in which more than half are on government-funded insurance or uninsured. Sen. John Laird, a Santa Cruz Democrat who chairs the Senate Budget Committee, said the goal is to tide eligible hospitals over until July 1, when the new fiscal year begins. Laird told CalMatters that he knows of two to three hospitals likely to qualify, but he declined to name them, saying doing so could scare away vendors and staff. He acknowledged that Watsonville Community Hospital in his own district is among the likely recipients.
Watsonville reported 8 days of cash on hand in the last quarter of 2025, according to state financial records. The hospital received an $8.3 million state loan in 2023. Spokesperson Jennifer Murray said in an email, “This is critically important for the hospital as we navigate fiscal challenges brought on by funding delays and cutbacks at the federal level.”
Madera Community Hospital, which closed in early 2023 and reopened in March 2025 after receiving $57 million from the state, ended 2025 with two days of cash on hand. Spokesperson Matthew Beehler told CalMatters the hospital intends to apply. He said delays in reimbursements and low patient volume have slowed its recovery, and the hospital is still working to contract with some insurers. “I think that we are headed towards the path of real sustainability for the hospital,” Beehler said. “It just takes time to have all that sort of reach its state of equilibrium.”
In the Eastern Sierra, Dr. Kevin Flanigan, CEO of the Southern Inyo Healthcare District, said he also plans to apply but is not sure his hospital will qualify because its cash balance fluctuates between 8 and 20 days. He estimates his facility needs about $1 million to get through 2026. “Then God willing, we find money elsewhere. If not, we begin the process of closing certain things,” Flanigan said. “We are clearly one of the most precarious hospitals in the state.”
Legislators from both major parties pressed for answers during a budget hearing last week. Republican Assemblyman David Tangipa, vice chair of the Assembly Budget Committee, said the combination of narrow criteria and expedited process made the bill seem tailored to one hospital. “It says 10 days. Why not put it at 30 days?” Tangipa said. “They needed to make sure that even though it appears to be a general fund that all of these other hospitals could apply for, that probably only one hospital met all of those qualifications.”
Democratic Sen. Chris Cabaldon of Napa called the lack of clarity “profoundly disturbing” and described the hearing as “one long ‘I said what I said’ hearing.” He told administration officials, “It is incumbent on this committee to be able to have real answers to the questions that are posed about the why and the evidence. We are not having a conversation. We are asking questions of fulfilling our constitutional role in this process and getting zero answers.”
Department of Finance spokesperson H.D. Palmer responded that the bill originated from the Legislature, not the administration. “They asked for our assistance in the expedited consideration of the bill outside of the regular budget process — and we complied and cooperated,” Palmer said. He called the lawmakers’ questioning “undignified sniping and sarcasm,” adding that if members were unable to research their own fast-tracked bill, “then that’s a question that’s better posed to them — not us.”
Laird said the $25 million figure was based on the number of hospitals legislators “informally” thought would be eligible. Unspent money would revert to the state, and lawmakers could add funding if it runs short. “It is what we think is necessary now,” he said. His office did not explain why the cash-on-hand threshold was set at 10 days; hospital administrators said the typical target is at least 90 days.
The emergency grant comes as hospitals across California, particularly in rural areas, warn they are at risk of dropping services or closing because of rising labor costs and federal Medi-Cal funding cuts. The California Hospital Association, which represents nearly 400 hospitals, is sponsoring a bill to add $300 million to the state’s distressed hospital loan program. Newsom proposed up to $50 million for hospitals in “immediate and significant financial distress” in his budget revision last week.
Some lawmakers said the state needs to address underlying problems. Republican Sen. Shannon Grove pressed finance department staff on whether the $25 million would actually save the targeted hospitals. “How long is this lifeline going to last? Is it even going to save the people who are in the 10-day timeframe?” she asked. “That is the intent,” responded department staff member Lupe Manriquez. “I know it’s the intent. Is it going to save them?” Grove asked again. “That’s the goal,” Manriquez answered.
Democratic Sen. Lola Smallwood-Cuevas of Los Angeles said the criteria were too narrow. “Right now, it’s far too narrow, and really by this time the hospital has gone over the cliff,” she said. “We want to figure out who’s standing on the cliff, who’s a few feet from the cliffs, who’s a mile from the cliff.”
Katherine Burnworth, board president of the Imperial Valley Healthcare District, which oversees two hospitals in Imperial County, said the $25 million statewide “is a drop in the bucket compared to the scale of the problem” and “does not address the ongoing instability that communities like ours live with year after year.”
Republicans on the committee argued that California has shortchanged hospitals’ Medi-Cal reimbursements. The hospital association estimates hospitals are reimbursed 74 cents for every dollar they spend on Medi-Cal patients. GOP lawmakers also pointed to unfunded state mandates, including a scheduled minimum-wage hike for health care workers and seismic-safety upgrades due by 2030. “We are throwing Band-Aids on everything, when really we need to just get together and fix the issues of what are the unfunded state mandates that are on our hospitals right now,” Tangipa said.