ICYMI: New Analysis Highlights Crucial Need for Governor Newsom’s Proposed MHSA Reform & Bond


“The Governor’s proposal makes necessary changes to align funding priorities with the original intent of the MHSA”

In case you missed it, yesterday the Steinberg Institute – founded by Sacramento Mayor Darrell Steinberg, author of the original Mental Health Services Act of 2004 (MHSA) – released an analysis highlighting the crucial need for Governor Newsom’s MHSA modernization and bond proposal – adding their trusted voice to the organizations and leaders in support of this historic transformation.

Earlier this year Governor Newsom announced the proposed transformation of the MHSA to align with updated care and services and better serve Californians’ mental health needs for years to come. The reform would bring more oversight and accountability to how behavioral health money is spent at the local level and ensure better results as we address our society-wide mental health and substance abuse crises. The accompanying multi-billion dollar bond proposal will build 10,000 new behavioral health beds and housing units to address California’s current shortage of community placements for rehabilitation and recovery.

The Governor’s proposal makes necessary changes to align funding priorities with the original intent of the MHSA — including by taking a more inclusive approach to expand the use of funding to substance use disorder treatment services — and, most importantly, best serve Californians living with the most serious behavioral health conditions.”

The report spotlights the need for a unified statewide plan to address multiple crises occurring throughout the country, including providing ongoing funding for a statewide workforce initiative and refocusing MHSA funds on key services that remain uncovered. Additionally, the report calls out the need for additional oversight and accountability of the funds currently being spent, a key component of Governor Newsom’s proposal as well as the shortage of behavioral health housing and treatment beds.

“It’s time to get back on track – these funds were intended to be used for our most vulnerable Californians and we need to ensure they are getting the full support they deserve,” said Steinberg Institute CEO Karen Larsen, “ Governor Newsom’s modernization proposal will help put thousands of people living with serious mental illness on the path to recovery.”

Below are the key excerpts from the new analysis:

“At the core of the MHSA was reducing serious mental illness and homelessness by providing life-saving care to individuals struggling with the most acute needs.”

“The Behavioral Health Modernization Proposal Aligns With the Original Intent of the MHSA: Addressing Serious Behavioral Health Needs and Homelessness…The Behavioral Health Modernization Proposal proposes to rename the MHSA the Behavioral Health Services Act (BHSA) and bring the BHSA into alignment with the original vision of the MHSA by elevating the issue of serious behavioral health needs and homelessness as a primary state behavioral health priority.”

“The Proposal Expands Use of Funding for Substance Use Disorder Treatment… As discussed earlier, the MHSA would be renamed to the BHSA under the Behavioral Health Modernization Proposal. This name change reflects the expanded use of BHSA funding for substance use disorder treatment services (which are currently only eligible for MHSA funding in limited cases).

“And Reflects a Focus on Addressing the Behavioral Health Workforce Crisis. In response to the current behavioral health workforce shortage, the Behavioral Health Modernization Proposal reserves up to 3 percent of total BHSA revenues for the state to implement a statewide workforce initiative focused on both pipeline investments and recruitment and retention efforts. This funding is intended to support the BH-CONNECT initiative’s workforce component.”

“The Proposal Also Reforms the Framework for Behavioral Health Outcomes and Accountability. The Behavioral Health Modernization Proposal includes several outcomes and accountability reforms to address the outcomes and accountability challenges…”

An Increased Focus on Serious Behavioral Health Needs and Homelessness Is Absolutely Warranted. As mentioned earlier, California is facing an unprecedented serious behavioral health and homelessness crisis. A recent UCSF report found that more than 171,000 individuals are experiencing homelessness statewide, more than double the amount in the next highest state. In addition, 82 percent of the report’s study participants reported having experienced a serious mental health condition, and 65 percent reported substance use. Failure to elevate this issue to the highest level of state priority does a disservice to the

original intent of the MHSA.”

This state oversight obligation is especially relevant because most counties are not spending the required proportion of MHSA funding they receive on FSPs. The state also has an obligation to deploy the necessary resources to provide lifesaving care for people experiencing serious behavioral health needs and homelessness. Therefore, efforts to ensure the state can fulfill its obligations — such as the Behavioral Health Modernization Proposal — are vital.

“…ensuring that MHSA funding is used in a targeted way ensures that funding has an impact on the lives of individuals living with mental illnesses and substance use disorders experiencing the greatest need.”

“…But Shifts In the Behavioral Health Funding Landscape Reduce the Burden on Current MHSA Spending. Since the MHSA passed, dedicated revenues for county behavioral health have doubled, and the behavioral health funding landscape has shifted dramatically. In addition, the state is implementing several major behavioral health policy changes that will significantly affect the funding landscape. These changes infuse additional funding into the behavioral health system (mainly from the state and federal government or commercial insurance payors).”

These changes complement and help reduce the burden on MHSA spending by shifting responsibility for programs and services currently paid for by the MHSA to other entities. For example, under several state initiatives, Medi-Cal managed care and commercial insurance plans are required to provide additional funding for school-based services (currently a key component of MHSA PEI funding).”

Accordingly, it is time to update the MHSA to more appropriately reflect how the act fits within the broader state architecture for behavioral health funding.”

“properly enforcing the CYBHI’s statutory requirement that Medi-Cal managed care and commercial insurance plans pay for behavioral health services provided in schools is necessary to ensure that counties do not need to use MHSA funding to cover these services.”

The Proposal Continues to Protect, and Appropriately Targets, Funding for PEI… In keeping with the original vision of the MHSA of a comprehensive approach to care, the Behavioral Health Modernization Proposal continues to include a dedicated, protected funding source for PEI. In addition, the proposal improves how prevention and early intervention dollars are spent by ensuring a targeted set aside for highly effective early intervention programs, such as first-episode psychosis programs while maintaining funding broad population-based programming for maximum impact.”

And Its Expansion of Funding for Substance Use Disorders Promotes an Inclusive Approach…The Behavioral Health Modernization Proposal’s addition of substance use disorder treatment services as an eligible use of funding corrects discriminatory policy decisions — such as reimbursement rates that are much lower relative to rates for mental health services — and promotes a more comprehensive and inclusive approach to care, in line with the principles of parity with resources for mental health and physical health.”

The Proposal Helps the State Fulfill Its Responsibility to Focus on Behavioral Health Outcomes and Accountability. As discussed earlier, the state is responsible for developing an effective strategy for collecting valuable data and measuring outcomes in the behavioral health system to demonstrate the effectiveness of programs and services. Yet, this strategy is missing from our current behavioral health system. Furthermore, a comprehensive approach to behavioral health planning that accounts for the system’s complexity is notably absent.”

“…the Behavioral Health Modernization Proposal represents an essential step toward the state fulfilling its responsibility to focus on behavioral health outcomes and accountability.”

The Steinberg Institute was “created to upend the status quo and dramatically raise the profile and increase the effectiveness of mental health policy-making in California.” The organization has been at the center of some of the most important mental and behavioral health policy for nearly a decade.