Gavin Newsom wants $5B to overhaul California mental health care. Here’s how he’ll get it

Gov. Gavin Newsom is joining with California lawmakers to make his plans to fund a multibillion-dollar overhaul of the state’s mental health care system a reality.

Newsom on Tuesday announced his support for two bills that would add treatment beds for homeless people struggling with mental illness and substance abuse and would pay for the changes with a $4.68 billion bond voters would consider during the upcoming spring primary election on March 5.

The governor first unveiled his plans to make changes to California’s Mental Health Services Act during a San Diego stop for his State of the State tour in March, when he pledged to “modernize how California treats mental illness, substance use disorder and homelessness.”

Sen. Susan Talamantes Eggman, D-Stockton, authored a bill amending the 20-year-old law, and Assemblywoman Jacqui Irwin, D-Thousand Oaks, will carry a measure calling for bond money to finance new treatment centers and housing facilities.

Voters in 2004 approved Proposition 63, which established the Mental Health Services Act. The law added a 1% tax on residents earning more than $1 million per year, which pays for more than 30% of state-funded mental health care.

This year, the tax is expected to generate $3.8 billion, which the state will distribute to counties to use for treatment facilities, outreach, workforce training and prevention efforts.

“We have a big confluence of crises in California,” said Dana Williamson, the governor’s chief of staff, during a call with reporters. “There’s mental health, housing, homelessness. And while Prop. 63 provided billions of dollars in funding and really good programming, it needs to be updated.”

Reforming the Mental Health Services Act

Newsom’s administration wants to change the existing law to include provisions for substance abuse treatment and add a requirement that $1 billion of the tax money go toward housing or residential facilities. The governor is aiming to help 10,000 more Californians struggling with serious mental illnesses or substance abuse each year.

Newsom wants the Mental Health Services overhaul and that funding to build on another of his behavioral health initiatives: his Community Assistance, Recovery and Empowerment Court, or CARE Court. The Legislature last year approved that program, which creates a system of civil mental health courts and requires counties to provide treatment for residents struggling with serious mental illnesses.

CARE Court critics pointed out the program did not provide housing for participants, even though it is targeted at homeless residents. The new treatment beds and residential facilities that the bills promise could help those taking part in the court system, which an initial cohort of counties will begin administering by Oct. 1.

Mental health funding issues

Local behavioral health care agencies have continually struggled to meet their communities’ mental health care needs, especially those who are also dealing with homelessness and substance abuse. And counties have not always been able to use the money for its intended purpose — to expand or offer new mental health care services.

Counties facing financial challenges during the Great Recession used the money to keep their local mental health care agencies afloat. The Legislature in 2011 also used nearly $900 million in Proposition 63 money to cover mental health care costs the state usually covered with money from the general fund.

State officials have also claimed local agencies hold onto Mental Health Services funds. The state auditor in 2018 said the California Department of Health Care Services did not provide enough oversight of the dollars, allowing counties to “amass hundreds of millions in unspent MHSA funds.”

Local behavioral health care providers in March expressed concerns about diverting $1 billion for housing, saying it would affect existing services.

But Sacramento Mayor Darrell Steinberg, who wrote the Mental Health Services Act as an assemblyman, was skeptical of these concerns. He said helping homeless residents with severe mental illnesses was part of the law’s original intent.

Steinberg also brought up the No Place Like Home Act, a 2016 law that allocated up to $2 billion in bond funding to build permanent supportive housing for homeless residents experiencing severe mental illnesses.

The law used a portion of Mental Health Services funding to repay the bond money.

“Housing and homelessness is the societal crisis of our time,” Steinberg said. “And when you combine that with the original intent from 20 years ago, it’s more than appropriate that the governor and the Legislature tried to bring to scale the success of the No Place Like Home Act and dedicate real money to housing for this population.”

The Bee Capitol Bureau’s Maggie Angst contributed to this story.