State Budget – May Revise

Governor Newsom Releases Revised State Budget Proposals
(Note: all the descriptions below are directly from the Administration’s just released document)

Last year, the state allocated a $12 billion multi-year investment for local governments to build housing and provide critical supports and homelessness services. The Governor’s Budget proposed an additional $2 billion General Fund over two years to continue the state’s efforts to address homelessness by investing in behavioral health housing and encampment cleanup grants. These investments are intended to serve as a bridge to other related efforts such as Homekey and California Advancing and Innovating Medi-Cal (CalAIM), which will redesign Medi-Cal to better serve Californians, including individuals experiencing homelessness, and provide long-term care. The May Revision includes an additional $150 million to fund more Homekey projects and $500 million for the development of interim housing designed to be built quickly, providing an additional type of housing to address homelessness.

The Administration has proposed a new court process to assist people living with untreated schizophrenia or other psychotic disorders. The May Revision includes $64.7 million to fund state department and Judicial Branch costs associated with the new Community Assistance, Recovery and Empowerment (CARE) Court. The Administration continues to work with counties to estimate costs associated with this new court process. In addition, the Governor’s Budget, as updated by the May Revision, made significant investments in community treatment and care for individuals suffering from mental illness who are deemed incompetent to stand trial. The Governor’s Budget, as updated by the May Revision, also allocates opioid settlement funds, expands medication assisted treatment and expands community-based mobile crises services. All of these investments will better serve individuals experiencing mental illness and substance use disorders. To support the implementation of these and other efforts, the Governor’s Budget also included $1.7 billion to invest in a multi-pronged effort to develop and train thousands of new care economy workers, including various mental health professionals and 25,000 new community health workers.

CARE Court is a new court process to deliver community-based behavioral health services and supports to Californians living with untreated schizophrenia spectrum or other psychotic disorders. CARE Court is intended to serve as an upstream intervention for the most severely impaired Californians to prevent avoidable psychiatric hospitalizations, incarceration, and Lanterman-Petris-Short Mental Health Conservatorship.
• Supporter Program—$10 million General Fund ongoing to the Department of Aging for the CARE Court Supporter Program to help the participant understand, consider, and communicate decisions by providing the tools to make self-directed choices to the greatest extent possible.
• Training and Technical Assistance—$15.2 million General Fund in 2022-23, $1.1 million General Fund annually between 2023-24 and 2026-27, and $1.3 million General Fund annually ongoing for the Department of Health Care Services to provide training and technical assistance to counties, data collection, and evaluation.
• Judicial Branch—$39.5 million General Fund in 2022-23 and $37.7 million ongoing for the Judicial Branch to conduct CARE Court hearings and provide resources for self-help centers.
The Administration continues to work with counties to estimate costs associated with this new court process.

As part of the 2021 Budget Act, $1 billion is currently available for Homeless Housing Assistance and Prevention (HHAP) in 2022-23. The Administration is committed to extending HHAP at current levels for additional years beyond 2022-23, pending further discussion with the Legislature to meaningfully increase outcomes and accountability on local HHAP spending to focus on highest priority needs, such as encampment resolution, Homekey operating sustainability, and CARE Court housing supports.

The COVID-19 Pandemic left many people feeling isolated, especially children and youth. Last year the Budget Act allocated $1.4 billion over multiple years to transform California’s behavioral health system for all California children and youth. The May Revision includes an additional $290 million over three years to address the most urgent needs and emergent issues in children’s mental health. As the state continues to implement a new behavioral health system for children and youth, this proposal will support grants to deliver well-being and mindfulness programs, as well as parent support education programs. This proposal will also fund grants to support children and youth at increased risk of suicide and a youth suicide crisis response pilot. The funding will also establish a center for researching, evaluating, and applying innovative new technologies to improve youth mental health. This will enable California to maximize the positive impact of emerging technology on the social and emotional well-being of children and youth and minimize the harm these technologies cause by focusing on the use of emergent technologies to improve assessment, supports, and treatment, particularly as it is provided through the Children and Youth Behavioral Health Initiative.

Local educational agencies have indicated that increasing operational costs, including increasing pension contribution costs, are challenging their operational capacities. To assist districts in responding to these external pressures, the May Revision includes $8 billion one-time Proposition 98 General Fund in discretionary funds, allocated on a per-pupil basis. It is the intent of the Administration that schools will use these one-time funds for purposes, including, but not limited to, protecting staffing levels, addressing student learning challenges, and supporting the mental health and wellness needs of students and staff. Funds received by K‑12 local educational agencies will offset applicable mandates debt owed to those entities.

Community schools partner with education, county, and nonprofit entities to provide integrated health, mental health, and social services alongside high-quality, supportive instruction, with a strong focus on community, family, and student engagement. The 2021 Budget Act included $3 billion Proposition 98 General Fund, available over several years, to expand and strengthen the implementation and use of the community school model to all schools in communities with high levels of poverty. This investment supports a whole-child framework for school transformation to guide local educational agencies in planning and implementing other recent state investments in universal nutrition, before/after school and summer school enrichment and care, universal transitional kindergarten, behavioral health supports, and other similar initiatives.

The stress, trauma, and social isolation caused by the COVID-19 Pandemic intensified an already existing mental health crisis among children and youth, particularly for youth of color, low-income communities, LGBTQ+ youth, and other vulnerable groups. Equally concerning is the increase in youth suicide rates over the last decade. Mental health is now the leading cause of hospitalization for children under 18 years of age in California. A recent study shows that 40 percent of transgender individuals have attempted suicide, with suicide risk being highest in transgender youth. The suicide rate for Black youth in California doubled between 2014 and 2020. A recent survey of students found that 14 percent of California 7th graders and 15 percent of 9th and 11th graders considered suicide. The May Revision includes $290 million General Fund one-time investments to implement a multi-pronged approach to address the urgent youth mental health crisis. The funding will also establish a center for researching, evaluating, and applying innovative new technologies to improve youth mental health. This will enable California to maximize the positive impact of emerging technology on the social and emotional well-being of children and youth and minimize the harm these technologies.
Prevent Youth Suicide:
• Youth Suicide Prevention Program—$40 million General Fund to develop and implement a data-driven targeted community-based youth suicide prevention program for youth at increased risk of suicide such as Black, Native American, Hispanic, and foster youth.
• Crisis Response—$50 million to provide grants to pilot school and community-based crisis response and supports following a youth suicide or youth suicide attempt and pilot a new approach of designating youth suicide and youth suicide attempts as a reportable public health event, which would trigger screening and resource connections at the local level for the impacted community.
Support Wellness and Build Resilience of Children, Youth, and Parents:
• Wellness and Mindfulness Programs—$85 million over two years for grants for wellness and mindfulness programs in schools and communities and expansion of parent support and training programs.
• Video Series—$15 million to develop and distribute a video series for parents to build their knowledge, tools and capacity to support the behavioral health of their children.
• Career Development—$25 million to identify and support the early career development of 2,500 highly talented and culturally diverse high school students interested in mental health careers.
• Assessment and Intervention—$75 million for next generation digital supports for remote and metaverse based mental health assessment and intervention.

Medi-Cal, California’s Medicaid program, is administered by the Department of Health Care Services (DHCS). Medi-Cal is a public health care program that provides comprehensive health care services at no or low cost for low-income individuals. The federal government mandates that a range of basic services be included in the program and the state provides additional optional benefits. The Department also oversees county-operated community mental health and substance use disorder programs, the California Children’s Services and the Primary and Rural Health Programs. The Medi-Cal budget is $121.9 billion ($25.1 billion General Fund) in 2021-22 and $135.5 billion ($36.6 billion General Fund) in 2022-23. The May Revision assumes that caseload will increase by approximately 6.6 percent from 2020-21 to 2021-22 and increase by 0.6 percent from 2021-22 to 2022-23. Medi-Cal is projected to cover approximately 14.5 million Californians in 2022-23, over one-third of the state’s population.

The Department of State Hospitals (DSH) administers the state mental health hospital system, the Forensic Conditional Release Program, the Sex Offender Commitment Program, and the evaluation and treatment of judicially and civilly committed patients. The May Revision includes $3.2 billion ($3 billion General Fund) in 2022-23 for support of the Department. The patient population is expected to reach 8,289 by the end of 2022-23, including patients receiving competency treatment in jail-based settings and community-based settings.

Realignment shifted administrative and fiscal responsibility to counties for a variety of programs, along with a dedicated source of funding. 1991 Realignment provides funding for social and health programs and 2011 Realignment provides funding for local public safety programs. Additionally, both 1991 and 2011 Realignment provide funding for mental health and child welfare programs. The programs for 1991 and 2011 Realignment are funded through two sources: state sales tax and vehicle license fees. These fund sources are projected to increase by 11.5 percent from 2020-21 to 2021-22 and increase by 5 percent from 2021-22 to 2022-23. 

In November 2014, voters passed Proposition 47, which requires misdemeanor rather than felony sentencing for certain property and drug crimes and permits incarcerated persons previously sentenced for these reclassified crimes to petition for resentencing. Proposition 47 established a fund to invest savings from reduced prison utilization to prevention and support community programs. The Department of Finance estimates net General Fund savings of $161.1 million in the 2022-23 May Revision. This is an increase of $13.8 million over the 2022-23 Governor’s Budget projection, due to updated diversion impact estimates. These funds are allocated according to the formula in the initiative, which requires 65 percent be allocated for grants to public agencies to support various recidivism reduction programs (such as mental health and substance use treatment services), 25 percent for grants to support truancy and dropout prevention programs, and 10 percent for grants for victims’ services. This additional funding brings the total allocated for these programs to approximately $608.4 million General Fund since the passage of Proposition 47.

Veteran Suicide Surveillance and Review Program—$5 million to establish a multidisciplinary team of professionals and stakeholders focusing on the identification and collection of veteran-specific suicide data, and coordinate a statewide assessment of veteran’s mental health and provide recommendations on future prevention, intervention, and post-intervention strategies. This program will build upon the work of the Violence Prevention Initiative at the California Department of Public Health. Veteran Mental Health Support Network Grants—$40 million to provide competitive grants to local jurisdictions that provide matching grants to expand mental health service capacity by supporting a network of veteran-specific mental health services throughout the state. The intent of this program is to assist the creation of self-sustaining, ongoing programs that support veterans and maximize available federal programs (U.S. Veteran’s Affairs and Medi-Cal).

The Department of State Hospitals continues to experience a significant growth in trial court referrals of individuals found incompetent to stand trial (IST) on felony charges. Additionally, the winter COVID-19 Omicron surge further impacted DSH’s operations resulting in further growth in the waitlist of individuals deemed felony IST pending placement in a treatment program. As of the end of April 2022 there were 1,915 individuals deemed IST awaiting treatment. The Governor’s Budget proposed funding for IST solutions, informed by the Incompetent to Stand Trial Solutions Workgroup convened last fall, to address the waitlist and to break the cycle of criminalization for individuals deemed felony IST. Based on feedback from stakeholder engagement and updated caseload projections, the May Revision includes $535.5 million General Fund in 2022-23, increasing to $638 million General Fund per year in 2025-26 and ongoing, to support the following changes to the proposed solutions:
• Early Stabilization and Community Care Coordination—To provide immediate solutions to support access to treatment for the over 1,900 individuals currently found IST on felony charges and waiting in jail, the May Revision includes additional funding for county sheriffs for custody supports, enabling stabilization teams increased access to ISTs.
• Expand Diversion and Community-Based Restoration Capacity—To increase the community infrastructure required to support the felony IST population, the May Revision includes additional funding to support county overhead to support the administration of the community-based restoration and diversion programs. The May Revision also includes increased investments into community housing that will be required to serve DSH identified populations for a minimum of 30 years.
• Improve IST Discharge Planning and Coordination—To reduce ISTs cycling through the criminal justice system by increasing coordination with county behavioral health departments to provide treatment records when ISTs are returned from DSH to the court, enabling counties to plan for continuity of treatment when the IST is released from jail.
• Improve the Quality of Alienist Evaluations—To improve the quality of IST determinations and decisions regarding the need for medications.

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