MHSA Revamp

Governor Garners Support for His Two-Bill Proposal 

Behavioral health and housing organizations, families, veterans groups, first responders, health care professionals, and local elected officials are backing Governor Newsom’s proposal to transform the Mental Health Services Act and build 10,000 new community behavioral health beds across the state as it continues to make progress in the Legislature. You may read the full press release from the Governor here

Legislative Analyst’s Office (LAO) Issues Recommendations

The LAO published a series of posts analyzing the Governor’s Behavioral Health Modernization proposal. You may view the posts below and key recommendations. The LAO will publish other recommendations soon.

Mental Health Services Act: Revenue Volatility and the Governor’s Proposal to Reduce Allowable County Reserves
Key Takeaways

  • Recommend Rejection of Governor’s Proposal to Reduce Allowable County Reserves. In light of extreme Mental Health Services Act (MHSA) revenue volatility, allowable county reserves would have to be around two-thirds higher than their current levels to provide reasonable protection against declines in revenue. The Governor’s proposal would therefore move allowable reserves in the wrong direction. In addition, we think counties should generally have more flexibility in how they can deposit and use reserves and offer suggestions for how to improve the overall MHSA reserve policy.
  • Recommend Addressing MHSA Revenue Volatility Head On. The volatile MHSA tax is not suited to supporting ongoing mental health services and sufficiently mitigating MHSA revenue volatility with a reserve policy alone would be challenging. A more straightforward approach would be to change the MHSA revenue source. We offer an option that we think has little downside from either the state’s or counties’ perspectives.

Mental Health Services Act: Proposed Restructuring of the MHSA Funding Categories and Impacts on County Spending
Key Takeaway

  • Administration’s Justification of Proposed Changes Incomplete. The administration’s proposal would reduce county spending flexibility and shift the focus of MHSA funding to Full-Service Partnerships and housing interventions. We find that the proposal likely will result in counties spending less on a number of current programs funded through MHSA, potentially reducing outpatient services, crisis response, prevention services, and outreach. We find that the administration’s justification for the proposal is incomplete and we provide several questions for the Legislature to ask the administration to assess whether the proposal is warranted. For example, can the administration provide evidence that the proposal is likely to result in better behavioral health outcomes for the population as a whole?

Mental Health Services Act: Proposed Change in Mental Health Services Oversight and Accountability Commission’s Role
Key Takeaway

  • Recommend Maintaining Mental Health Services Oversight and Accountability Commission’s Authority Absent Compelling Justification for Governor’s Proposal. While the commission would continue to serve in an advisory role to the administration and the Legislature under the Governor’s proposal, the Governor proposes to remove most of the commission’s current oversight, regulatory, and programmatic authority over MHSA funding. We find that the proposed substantial reduction of the commission’s authority would limit its independence. Given the lack of analysis provided by the administration on the potential benefits of its proposal, we recommend the Legislature consider maintaining the commission’s current roles in providing general oversight as well as implementing certain components of the MHSA. Additionally, we recommend maintaining the commission’s authority to receive all information requested of state departments and all state and local entities that receive MHSA funding at its independent discretion. 


The California State Association of Counties held an MHSA Working Group meeting to discuss the MHSA revamp and compare notes on potential impacts to counties. Several unifying themes were identified. You may view the discussion points here

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