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Legislature Passes Newsom’s Proposal to Retool Mental Health Services Act

Legislature Passes Newsom’s Proposal to Retool Mental Health Services Act

(Lydia Zuraw/KFF Health News)

The California Legislature passed a pair of bills greenlighting Gov. Gavin Newsom’s campaign to build 10,000 new beds and housing units and increase drug addiction treatment as part of his response to the state’s homelessness and drug crises. The Democratic governor is expected to sign the bills, which received bipartisan support.

The first bill, SB 326, is designed to transform the state’s Mental Health Services Act into the Behavioral Health Services Act, using an existing tax on millionaires to treat the most seriously mentally ill and to increase programs for substance use disorders. The second, AB 531, authorizes the state to issue $6.38 billion in bonds to build more housing for homeless people and treatment beds for those with the most severe needs.

Newsom will now ask voters to approve the changes on the March primary ballot.

“This reform will bring much needed accountability currently lacking at the local and state level, increased transparency and visibility into the whole mental health and addiction treatment system, and a modernized focus to address today’s crises,” Newsom said in a statement.

According to a June statewide study on homelessness by the University of California-San Francisco, more than 171,000 Californians experience homelessness daily, representing 30% of the nation’s homeless population. The majority of participants in the study reported high lifetime rates of mental health and substance use challenges; 82% reported a period in their life in which they experienced a serious mental health condition, and nearly two-thirds reported the use of illicit drugs or heavy drinking.

The mental health act was passed as Proposition 63 by voters in 2004 and levied a tax of 1% on income above $1 million, known as the “millionaire’s tax.” That money then flowed from the state to counties for use in five mental health areas, including community support, prevention, and facilities. Funding changes year to year, but the tax generated $3.3 billion in the 2022-23 fiscal year, according to the nonpartisan Legislative Analyst’s Office.

However, the program has been criticized over the years for falling short of its initial promise. Last year, the Los Angeles Times highlighted several reasons, including revenue swings, consistent underfunding of social and mental health programs, tension between state and county officials, and a shortage of mental health clinicians.

Newsom pledged that the newly renamed Behavioral Health Services Act would build 10,000 new beds and housing units for people experiencing homelessness who have behavioral health needs. It would also focus on diversifying the workforce and improving accountability — tracking outcomes in a more detailed way — so the government can understand what’s working and what’s not.

However, counties that administer this money at the local level have raised concerns. A letter from the California State Association of Counties and other organizations representing local government interests expressed fear that Newsom’s proposal would result in counties receiving significantly less funding for core services, little protection from fluctuation in funds, and less flexibility in spending.

The governor’s office emphasized that new requirements still provide flexibility.

Assembly member Jacqui Irwin (D-Thousand Oaks), who was the lead author of the bond bill and served for seven years as the chair of the body’s Military and Veterans Affairs Committee, is particularly proud of a provision that will reserve $1.07 billion for housing for veterans. California has the largest number of veterans experiencing homelessness — 31% of the nation’s homeless veteran population — according to a 2021 homelessness report by the U.S. Department of Housing and Urban Development.

“Getting veterans experiencing homelessness off the streets has long been a priority for California, but getting some of our most vulnerable veterans into needed treatment for behavioral health challenges will be transformative,” Irwin said.

Sen. Susan Talamantes Eggman (D-Stockton), who co-authored the bond bill and was the lead author of the other bill, said the bills are critical to the state’s continuum of care. “Together they will build out voluntary housing, reprioritize resources to those with the greatest needs, and provide a true safety net to prevent the many people falling through the cracks that we see today,” she said.