Money For Housing Californians With Mental Illness Heads To Ballot Box

A man sleeps on Sixth Street near Skid Row on May 18, 2015. (Heidi de Marco/KHN)

Los Angeles County is facing a public health crisis: More than one-quarter of its 53,000 homeless residents struggle with mental illness.

“When you’re homeless on the street, your life is about survival. It’s hard to be focused on mental health,” said Maria Funk, a county mental health clinic program manager. “We are failing in many ways.”

Funk pointed out that the county has been waiting two years for $700 million to build about 3,600 housing units for homeless people with mental illness. The units would come with access to health and social services.

So far, not a penny has been distributed.

That’s because the source of the money, a state program called “No Place Like Home,” has been tied up in court with a lawsuit. Under the program, the state would issue $2 billion in bonds, which would be distributed to counties. The bonds would be repaid with proceeds from the state’s Mental Health Services Act, which levies a 1 percent tax on personal incomes of $1 million and above.

Opponents argue that’s an illegal use of the money.

Rather than waiting for a legal resolution, state lawmakers agreed in their recent state budget deal to let voters decide. The question will be on the ballot in November.

“All of the counties that we deal with, from teeny-tiny ones to L.A., were … eager to apply for the funding,” said Farrah McDaid Ting, a legislative representative for the California State Association of Counties.

The Mental Health Services Act, which was approved by voters in 2004, has raised billions for mental health treatment and services.

Under the law, the money is distributed to counties, where about 80 percent of the revenue must be spent on treatment of severe mental illnesses and the remaining 20 percent earmarked for early intervention and prevention.

If voters approve the No Place Like Home program in November, the state would issue the bonds and repay them later by skimming about 7 percent off counties’ annual MHSA budgets for the next 20 to 30 years.

“You can’t recover if you’re unsafe and you’re homeless,” said Dennis Culhane, a University of Pennsylvania professor who researches homelessness. Culhane published a study in 2002 revealing that people suffering from severe mental illness who live on the streets each use an average of $40,000 in acute care services annually, such as inpatient psychiatric beds.

But Mary Ann Bernard, a retired attorney who filed the lawsuit shortly after the program was adopted in 2016, argues that it constitutes an illegal use of MHSA money.

She said she believes the law could be interpreted to allow people who don’t have severe mental illnesses, such as those with drug addictions or victims of domestic violence, to move into housing units funded by MHSA dollars.

“I truly believe that the severely mentally ill will see very little of this housing, but it will be harder to fund hospital beds or other forms of treatment because they’re taking away the money to house people who aren’t sick,” she said.

The case is pending in Sacramento Superior Court, with its next hearing scheduled for July 23.

Craig Cornett, who was the Senate finance director when the bill passed, explained that the program is designed to give counties the large amount of capital needed for expensive housing projects upfront.

“It’s like trying to get out of an apartment and into a home. It would take years’ worth of your income to buy a home,” he explained.

Counties are “excited” by the prospect of getting a cash infusion for housing this population, said Maggie Merritt, executive director of the Steinberg Institute, a nonprofit that advocates for policies that help people with mental illness.

“There are lots of people who maybe could be in housing receiving services who are languishing on our streets,” Merritt said.

Some counties have already made plans to use the money:

  • San Diego County, which has a homeless population of about 8,500, is expecting about $140 million to build housing for those with mental illness, said David Estrella, the county director of Housing and Community Development Services.
  • Santa Clara County, which has a homeless population of more than 7,000, hopes for $100 million to build 1,800 units for the same population, according to Ky Le, director of the county’s Office of Supportive Housing.

The program requires the housing units to come with supportive services such as counseling and case management.

But residents aren’t required to utilize them, and opponents fear they won’t. Lauren Rettagliata, a mental health advocate in Contra Costa County, worries that people with severe mental illness will shut themselves in their units while their conditions worsen.

“It’s much more complicated than ‘Give someone a house and it will make it better,’ ” Rettagliata said. “When you go to San Francisco and see some guy urinating in public and talking about all kinds of paranoid things, putting him in an apartment … isn’t going to work.”

A scathing state audit released earlier this year faulted counties for sitting on $157 million to $274 million worth of MHSA funding. In addition to those reserves, the counties also hoarded $231 million they should return to the state, the audit said.

“Why are we doing this when the counties already have the money?” Bernard asked. “Developers in our larger cities are going to get the biggest benefit from this.”

But advocates argue that housing is an essential part of treatment — and that it’s needed urgently.

If it weren’t for the lawsuit, “we probably would have units coming online already,” said Funk, of Los Angeles County. “Even if it’s on the ballot and is passed in November, we will have lost two and a half years.”

Related Topics

2018 Elections Courts Innovations Mental Health Public Health