June 22, 2023

Three months after Governor Newsom’s initial announcement proposing to modernize the state’s behavioral health system and create more behavioral health housing, details of the proposal were released in print through two legislative policy bills. SB 326, authored by Senator Susan Talamantes Eggman, proposes significant changes to the Mental Health Services Act (MHSA), and AB 531, authored by Assemblymember Jacqui Irwin, proposes a $4.68 billion bond measure to finance the construction of community mental health facilities, both for consideration on the March 2024 ballot.

While the top-line elements of the Governor’s proposal remain from his initial announcement, the proposal also expands the state role in administering and directing MHSA funding. This comprehensive proposal requires detailed review and analysis to assess its full policy and fiscal impacts to counties and their communities. High-level provisions of the proposal include:

• Recasts/renames the MHSA as the Behavioral Health Services Act.
• Allows MHSA funds to serve people with substance use disorders (SUD)
• Revises the distribution of MHSA funding, as follows:
  • 30% dedicated to housing interventions
  • 35% for Full-Service Partnerships
  • 30% for behavioral health (BH) services and supports
  • 5% for population-based mental health and SUD prevention programs
  • Increases state-directed funding from 5% to up to 8% of total annual revenues. The increase will fund CalHHS Agency’s costs to implement a statewide BH workforce initiative.

• Makes changes to the county planning process, requiring county integrated plans to be developed every three years with local stakeholder groups.
• Includes new accountability and oversight measures, requiring counties to annually submit a County Behavioral Health Outcomes, Accountability, and Transparency Report to DHCS, and authorizes DHCS to impose a corrective action plan, monetary sanctions, or temporarily withhold payment to counties that fail to submit data and information.
• Authorizes $4.68 billion in general obligation bonds to finance grants for the acquisition of capital assets for, and the construction and rehabilitation of, unlocked, voluntary, and community-based treatment settings and residential care settings.
• Up to $865 million of the total is to be used for grants for housing veterans and others who are experiencing or at risk of homelessness and are living with a behavioral health challenge.

The Governor released a statement and fact sheet. Additional details of the proposal are also available here. The anticipated next steps for these two policy bills are to work their way through the legislative process in the coming months, and will require consideration and approval by the Legislature before moving to the Governor’s desk for signature in 2023. These steps need to occur prior to being presented to the voters for approval in March 2024.

The Department of Health Care Services (DHCS) will host a webinar today, Thursday, June 22 at 3:30 p.m. (no registration required) to provide an update on the Governor’s proposal.

We believe many aspects of the Governor’s proposal align with core principles CSAC has long supported to change MHSA, but other aspects will require significant vetting by counties as the actual service providers. CSAC will continue to advocate for changes to make MHSA work better for your communities by engaging through the legislative process.