AB 2843: Mental Health Services Fund.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2018-03-23
Existing law, the Mental Health Services Act (MHSA), an initiative measure enacted by the voters by Proposition 63 at the November 2, 2004, statewide general election, establishes the continuously appropriated Mental Health Services Fund to fund various county mental health programs by imposing a tax of 1% on annual incomes above $1,000,000. Existing law reallocates funds back to a county that failed to spend its initial funds within 3 years, and requires the county, by July 1, 2018, to prepare a plan to expend those funds on or before July 1, 2020. Under existing law, The MHSA requires funds allocated to a county that have not been spent within a specified time would to revert to the Mental Health Services Fund, as provided. Fund and to be reallocated to other counties for the purposes for which the unspent funds were initially allocated to the original county. The MHSA permits amendment by the Legislature by a 2/3 vote of each house if the amendment is consistent with, and furthers the intent of, the MHSA.
This bill would state the intent of the Legislature to enact legislation that would require a county that receives reallocated funds from the Mental Health Services Fund to spend those funds within 2 years of adopting an expenditure plan for those funds. It would further state the intent of the Legislature that any funds not expended by a county within those 2 years would revert to the Mental Health Services Fund to be redistributed to cities within that county. additionally require those funds subject to reversion to be reallocated to cities, special districts, school districts, or other public entities for the provision of mental health services consistent with the intent of the MHSA. The bill would find and declare that its provisions are consistent with and further the intent of the MHSA. By allocating moneys in the Mental Health Services Fund for new purposes, this bill would make an appropriation.
Existing law, the Mental Health Services Act (MHSA), an initiative measure enacted by the voters by Proposition 63 at the November 2, 2004, statewide general election, establishes the continuously appropriated Mental Health Services Fund to fund various county mental health programs by imposing a tax of 1% on annual incomes above $1,000,000. Existing law reallocates funds back to a county that failed to spend its initial funds within 3 years, and requires the county, by July 1, 2018, to prepare a plan to expend those funds on or before July 1, 2020. Under existing law, funds not spent within a specified time would revert to the Mental Health Services Fund, as provided. The MHSA permits amendment by the Legislature by a 2/3 vote of each house if the amendment is consistent with, and furthers the intent of, the MHSA.
This bill would state the intent of the Legislature to enact legislation that would require a county that receives reallocated funds from the Mental Health Services Fund to spend those funds within 2 years of adopting an expenditure plan for those funds. It would further state the intent of the Legislature that any funds not expended by a county within those 2 years would revert to the Mental Health Services Fund to be redistributed to cities within that county.
(a)In order to promote efficient implementation of this act, the county shall use funds distributed from the Mental Health Services Fund as follows:
(1)In 200506, 200607, and in 200708, 10 percent shall be placed in a trust fund to be expended for education and training programs pursuant to Part 3.1.
(2)In 200506, 200607, and in 200708, 10 percent for capital facilities and technological needs distributed to counties in accordance with a formula developed in consultation with the County Behavioral Health Directors Association of California to implement plans developed pursuant to Section 5847.
(3)Twenty percent of funds distributed to the counties pursuant to subdivision (c) of Section 5891 shall be used for prevention and early intervention programs in accordance with Part 3.6 (commencing with Section 5840) of this division. 5840).
(4)The expenditure for prevention and early intervention may be increased in any county in which the department determines that the increase will decrease the need and cost for additional services to severely mentally ill persons in that county by an amount at least commensurate with the proposed increase.
(5)The balance of funds shall be distributed to county mental health programs for services to persons with severe mental illnesses pursuant to Part 4 (commencing with Section 5850) for the childrens system of care and Part 3 (commencing with Section 5800) for the adult and older adult system of care. These services may include housing assistance, as defined in Section 5892.5, to the target population specified in Section 5600.3.
(6)Five percent of the total funding for each county mental health program for Part 3 (commencing with Section 5800), Part 3.6 (commencing with Section 5840), and Part 4 (commencing with Section 5850) of this division, 5850), shall be utilized for innovative programs in accordance with Sections 5830, 5847, and 5848.
(b)In any fiscal year after 200708, the 2007-08 fiscal year, programs for services pursuant to Part 3 (commencing with Section 5800) and Part 4 (commencing with Section 5850) of this division may include funds for technological needs and capital facilities, human resource needs, and a prudent reserve to ensure services do not have to be significantly reduced in years in which revenues are below the average of previous years. The total allocation for purposes authorized by this subdivision shall not exceed 20 percent of the average amount of funds allocated to that county for the previous five fiscal years pursuant to this section.
(c)The allocations pursuant to subdivisions (a) and (b) shall include funding for annual planning costs pursuant to Section 5848. The total of these costs shall not exceed 5 percent of the total of annual revenues received for the fund. The planning costs shall include funds for county mental health programs to pay for the costs of consumers, family members, and other stakeholders to participate in the planning process and for the planning and implementation required for private provider contracts to be significantly expanded to provide additional services pursuant to Part 3 (commencing with Section 5800) and Part 4 (commencing with Section 5850) of this division. 5850).
(d)Prior to making the allocations pursuant to subdivisions (a), (b), and (c), funds shall be reserved for the costs for the State Department of Health Care Services, the California Behavioral Health Planning Council, the Office of Statewide Health Planning and Development, the Mental Health Services Oversight and Accountability Commission, the State Department of Public Health, and any other state agency to implement all duties pursuant to the programs set forth in this section. These costs shall not exceed 5 percent of the total of annual revenues received for the fund. The administrative costs shall include funds to assist consumers and family members to ensure the appropriate state and county agencies give full consideration to concerns about quality, structure of service delivery, or access to services. The amounts allocated for administration shall include amounts sufficient to ensure adequate research and evaluation regarding the effectiveness of services being provided and achievement of the outcome measures set forth in Part 3 (commencing with Section 5800), Part 3.6 (commencing with Section 5840), and Part 4 (commencing with Section 5850) of this division. 5850). The amount of funds available for the purposes of this subdivision in any fiscal year shall be is subject to appropriation in the annual Budget Act.
(e)In 200405, the 2004-05 fiscal year, funds shall be allocated as follows:
(1)Forty-five percent for education and training pursuant to Part 3.1 (commencing with Section 5820) of this division. 5820).
(2)Forty-five percent for capital facilities and technology needs in the manner specified by paragraph (2) of subdivision (a).
(3)Five percent for local planning in the manner specified in subdivision (c).
(4)Five percent for state implementation in the manner specified in subdivision (d).
(f)Each county shall place all funds received from the State Mental Health Services Fund in a local Mental Health Services Fund. The Local Mental Health Services Fund balance shall be invested consistent with other county funds and the interest earned on the investments shall be transferred into the fund. The earnings on investment of these funds shall be available for distribution from the fund in future fiscal years.
(g)All expenditures for county mental health programs shall be consistent with a currently approved plan or update pursuant to Section 5847.
(h)(1)Other than funds placed in a reserve in accordance with an approved plan, any funds allocated to a county that have not been spent for their authorized purpose within three years shall revert to the state to be deposited into the fund and available for other counties counties, or cities, special districts, school districts, or other public entities, in future years, provided however, that funds for capital facilities, technological needs, or education and training may be retained for up to 10 years before reverting to the fund.
(2)If a county receives approval from the Mental Health Services Oversight and Accountability Commission of a plan for innovative programs, pursuant to subdivision (e) of Section 5830, the countys funds identified in that plan for innovative programs shall not revert to the state pursuant to paragraph (1) until three years after the date of the approval.
(3)Notwithstanding paragraph (1), any funds allocated to a county with a population of less than 200,000 that have not been spent for their authorized purpose within five years shall revert to the state as described in paragraph (1).
(4)Notwithstanding paragraphs (1) and (2), if a county with a population of less than 200,000 receives approval from the Mental Health Services Oversight and Accountability Commission of a plan for innovative programs, pursuant to subdivision (e) of Section 5830, the countys funds identified in that plan for innovative programs shall not revert to the state pursuant to paragraph (1) until five years after the date of the approval.
(i)If there are still additional revenues available in the fund after the Mental Health Services Oversight and Accountability Commission has determined there are prudent reserves and no unmet needs for any of the programs funded pursuant to this section, including all purposes of the Prevention and Early Intervention Program, the commission shall develop a plan for expenditures of these revenues to further the purposes of this act and the Legislature may appropriate these funds for any purpose consistent with the commissions adopted plan that furthers the purposes of this act.
(j)For the 201112 fiscal year, General Fund revenues will be insufficient to fully fund many existing mental health programs, including Early and Periodic Screening, Diagnosis, and Treatment (EPSDT), Medi-Cal Specialty Mental Health Managed Care, and mental health services provided for special education pupils. In order to adequately fund those programs for the 201112 fiscal year and avoid deeper reductions in programs that serve individuals with severe mental illness and the most vulnerable, medically needy citizens of the state, prior to distribution of funds under paragraphs (1) to (6), inclusive, of subdivision (a), effective July 1, 2011, moneys shall be allocated from the Mental Health Services Fund to the counties as follows:
(1)Commencing July 1, 2011, one hundred eighty-three million six hundred thousand dollars ($183,600,000) of the funds available as of July 1, 2011, in the Mental Health Services Fund, shall be allocated in a manner consistent with subdivision (c) of Section 5778 and based on a formula determined by the state in consultation with the County Behavioral Health Directors Association of California to meet the fiscal year 201112 General Fund obligation for Medi-Cal Specialty Mental Health Managed Care.
(2)Upon completion of the allocation in paragraph (1), the Controller shall distribute to counties ninety-eight million five hundred eighty-six thousand dollars ($98,586,000) from the Mental Health Services Fund for mental health services for special education pupils based on a formula determined by the state in consultation with the County Behavioral Health Directors Association of California.
(3)Upon completion of the allocation in paragraph (2), the Controller shall distribute to counties 50 percent of their 201112 Mental Health Services Act component allocations consistent with Sections 5847 and 5891, not to exceed four hundred eighty-eight million dollars ($488,000,000). This allocation shall commence beginning August 1, 2011.
(4)Upon completion of the allocation in paragraph (3), and as revenues are deposited into the Mental Health Services Fund, the Controller shall distribute five hundred seventy-nine million dollars ($579,000,000) from the Mental Health Services Fund to counties to meet the General Fund obligation for EPSDT for the 201112 fiscal year. These revenues shall be distributed to counties on a quarterly basis and based on a formula determined by the state in consultation with the County Behavioral Health Directors Association of California. These funds shall not be subject to reconciliation or cost settlement.
(5)The Controller shall distribute to counties the remaining 201112 Mental Health Services Act component allocations consistent with Sections 5847 and 5891, beginning no later than April 30, 2012. These remaining allocations shall be made on a monthly basis.
(6)The total one-time allocation from the Mental Health Services Fund for EPSDT, Medi-Cal Specialty Mental Health Managed Care, and mental health services provided to special education pupils as referenced shall not exceed eight hundred sixty-two million dollars ($862,000,000). Any revenues deposited in the Mental Health Services Fund in the 201112 fiscal year that exceed this obligation shall be distributed to counties for remaining fiscal year 201112 Mental Health Services Act component allocations, consistent with Sections 5847 and 5891.
(k)Subdivision (j) shall not be subject to repayment.
(l)Subdivision (j) shall become inoperative on July 1, 2012.
SEC. 2.Section 5899.1 of the Welfare and Institutions Code is amended to read:5899.1.(a)On or after July 1, 2017, funds subject to reversion pursuant to subdivision (h) of Section 5892 shall be reallocated to other counties for the purposes for which the unspent funds were initially allocated to the original county. county, or to cities, special districts, school districts, or other public entities for the provision of mental health services consistent with the intent of the Mental Health Services Act.
(b)Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department, without taking any further regulatory action, may implement, interpret, or make specific this section, Section 5892.1, and subdivision (h) of Section 5892, by means of all-county letters or other similar instructions, until applicable regulations are adopted in accordance with Section 5898, or until July 1, 2019, whichever occurs first. The all-county letters or other similar instructions shall be issued only after the department provides the opportunity for public participation and comments.
SEC. 3.The Legislature finds and declares that this act is consistent with, and furthers the intent of, the Mental Health Services Act within the meaning of Section 18 of the Mental Health Services Act.
SECTION 1.It is the intent of the Legislature to enact legislation that would require a county that receives reallocated funds from the Mental Health Services Fund to spend those funds within two years of adopting an expenditure plan for those funds. It is further the intent of the Legislature that any funds not expended by a county within those two years would revert to the Mental Health Services Fund to be redistributed to cities within that county.It is the intent of the Legislature to enact legislation that would require a county that receives reallocated funds from the Mental Health Services Fund to spend those funds within two years of adopting an expenditure plan for those funds. It is further the intent of the Legislature that any funds not expended by a county within those two years would revert to the Mental Health Services Fund to be redistributed to cities within that county.
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Date
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Status
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| May 31, 2018 | Read third time. Refused passage. |
| May 25, 2018 | From committee: Do pass. (Ayes 12. Noes 4.) (May 25). |
| May 9, 2018 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 18, 2018 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 11. Noes 4.) (April 17). Re-referred to Com. on APPR. |
| Apr 2, 2018 | Re-referred to Com. on HEALTH. |
| Mar 23, 2018 | From committee chair, with author's amendments: Amend, and re-refer to Com. on HEALTH. Read second time and amended. |
| Mar 22, 2018 | Referred to Com. on HEALTH. |
| Feb 17, 2018 | From printer. May be heard in committee March 19. |
| Feb 16, 2018 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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| May 31, 2018 | AB 2843 GLORIA Assembly Third Reading | Assembly Floor |
Passed |
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| May 25, 2018 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
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| Apr 17, 2018 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Health |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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| 319-2081 | ** Against | May 7, 2018 |
| Appr. | ** Against | May 7, 2018 |
| California Behavioral Health Directors Association | ** Against | Apr 13, 2018 |
| California State Association Of Counties | ** Against | Apr 13, 2018 |
| City Of San Diego, Council District Three | ** Support | Apr 13, 2018 |
| County Behavioral Health Directors | * Against | Apr 17, 2018 |
| Rural County Representatives Of California | * Against | Apr 17, 2018 |
| Urban Counties of California | * Against | Apr 17, 2018 |
ASSEMBLY THIRD READING
ATR Bill Id:AB 2843
Author:(Gloria)
As Amended Ver:March 23, 2018
2/3 vote
Committee | Votes | Ayes | Noes |
Health | 11-4 | Wood, Aguiar-Curry, Bonta, Burke, Carrillo, Limón, McCarty, Nazarian, Rodriguez, Santiago, Thurmond | Mayes, Bigelow, Flora, Waldron |
Appropriations | 12-4 | Gonzalez Fletcher, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Friedman, Eduardo Garcia, Nazarian, Quirk, Reyes | Bigelow, Fong, Gallagher, Obernolte |
SUMMARY: Adds cities, special districts, school districts, or other public entities to the list of entities eligible to receive an excess of Mental Health Services Act (MHSA) funds subject to reversion for the provision of mental health services consistent with the intent of the MHSA.
EXISTING LAW:
- Establishes the MHSA, enacted by voters in 2004 as Proposition 63, to provide funds to counties to expand services, develop innovative programs, and integrated service plans for mentally ill children, adults, and seniors through a 1% income tax on personal income above $1 million.
- Deems all unspent funds subject to reversion as of July 1, 2017, to have been reverted to the Fund and reallocated to the county of origin for the purposes for which they were originally allocated.
- Requires the Department of Health Care Services (DHCS), on or before July 1, 2018, in consultation with counties and other stakeholders, to prepare and submit a report to the Legislature identifying the amounts that were subject to reversion prior to July 1, 2017, including to which purposes the unspent funds were allocated.
- Requires DHCS to provide to counties the amounts it has determined are subject to reversion, and provide a process for counties to appeal this determination.
FISCAL EFFECT: According to the Assembly Appropriations Committee, as this bill simply allows money to be allocated to different public entities but does not develop a process to award money, it does not effectuate anything on its own. However, to award funds as this bill proposes, the Mental Health Services Oversight and Accountability Commission (commission) or another state agency would likely incur significant costs to develop and implement new funding programs relevant to these public entities (Mental Health Services Fund state administrative set-aside). The amount that may be reverted and available for allocation cannot be estimated.
COMMENTS: According to the author, California voters recognized the need to provide mental health services to some of our most vulnerable populations with the passage of Proposition 63 in 2004. They did not expect, however, that over the following decade since its passage, nearly $2.5 billion in MHSA funds would go unspent. More specifically, as of September 2017, $231 million of that $2.5 billion should have been reverted back to the state for reallocation as a result of local mental health agencies' failure to meet expenditure timelines. This bill allows other public entities the opportunity to step up to address our mental health crisis by making reverted MHSA funds – funds that local mental health agencies have not expended nor set aside in reserves – available for uses consistent with the MHSA.
- Proposition 63. Proposition 63 was passed by voters in November 2004. The MHSA imposes a 1% income tax on personal income in excess of $1 million and creates the 16 member Commission charged with overseeing the implementation of MHSA. The 2016-17 Governor's Budget projected that $1.9 billion in revenue would be deposited into the Fund in fiscal year 2017-18. The MHSA addresses a broad continuum of prevention, early intervention, and service needs, as well as provided funding for infrastructure, technology, and training needs for the community mental health system. In addition to local programs, the MHSA authorizes up to 5% of revenues for state administrative functions performed by a variety of state entities such as the DHCS and OSHPD. It also funds evaluation of the MHSA by the Commission, which was established by the MHSA. Unspent MHSA funds are required to be placed in a reserve in accordance with an approved plan, and funds allocated to a county that have not been spent for their authorized purpose within three years are required to revert those funds back to the state.
- State Auditor Report and Recommendations. On February 27, 2018, the State Auditor released a report entitled "Mental Health Services Act: The State Could Better Ensure the Effective Use of Mental Health Services Act Funding" (Audit Report), at the request of the Joint Legislative Audit Committee. The Audit Report concluded that despite having significant responsibility for the MHSA program since 2012, DHCS has not developed a process to recover unspent MHSA funds from local mental health agencies after the statutory time frames for spending the funds have elapsed, known as reversion. As a result, the local mental health agencies have had less incentive to spend MHSA funds in a timely manner and had amassed unspent funds of $231 million as of the end of fiscal year 2015–16 that they should have reverted to the State for it to reallocate to other local mental health agencies. This figure does not include funds held in reserves or interest earned on the unspent funds. However, the Audit Report noted that the Legislature enacted a one‑time change in state law in 2017 that allowed local mental health agencies to retain all funds that were subject to reversion as of July 1, 2017. The Audit Report concluded that nevertheless, this one‑time allowance did not resolve the larger issue that DHCS has been slow in implementing a process to revert unspent MHSA funds. The State Auditor recommended, in order to ensure local mental health agencies spend MHSA funds in a timely manner, DHCS implement a fiscal reversion process to reallocate to other local mental health agencies any MHSA funds that are unspent within the statutory reversion time frames. The State Auditor also recommended DHCS clarify that the interest that local mental health agencies earn on unspent MHSA funds is also subject to reversion requirements and should establish an MHSA reserve level that is sufficient but not excessive.
San Diego City Councilmember Christopher Ward states in support of the bill that California is facing a severe mental health crisis despite the availability of significant funding specific to providing mental health services. The City of San Diego is suffering from a homelessness crisis and many of those unsheltered on our streets are in need of mental health services. The City's resources are insufficient to fully and appropriately respond to this specific need. This bill could provide additional support services to help handle mental health and social needs where the funds exist but are not otherwise serving the public.
The California Behavioral Health Directors Association, California State Association of Counties, Rural County Representatives of California, Urban Counties of California, write as a coalition (the Coalition) in opposition that the MHSA was created to support counties in addressing the urgent need for expanding accessible, recovery-based community health services. This funding has expanded and transformed the public mental health system to achieve results such as a reduction in incarcerations, school failures, unemployment and homelessness for individual living with mental health issues. The Coalition states that many of the most effective MHSA interventions are accomplished in collaboration with county affiliates, schools, school districts, and other local entities. Nothing in current law hinders such collaboration. In fact, the Coalition notes, there are hundreds of MHSA programs already operating in collaboration with local public schools, city policy departments, and other local public entities. The Coalition argues that this bill sidesteps the leadership role and legal responsibility that counties play in California in meeting the health and human service needs of low-income, vulnerable Californians with mental health needs. Shifting funds away from counties will result in a disruption of local planning and the priorities that have already been set in communities with respect to coordinated efforts between counties, schools, and other local agencies. The Coalition further notes that AB 114 (Committee on Budget), Chapter 38, Statutes of 2017, comprehensively addressed the issue of what happens to funds that remain in county accounts after a certain period of time, also known as "reversion." These recent statutory changes requires counties to submit a plan to DHCS for expending all unallocated funds by July 1, 2018, and the counties have until 2020 to expend these funds. The Coalition concludes that these changes have already established a balanced approach to MHSA reversion for both the past and the future, thereby providing continuity and predictability to counties and their local providers moving forward.
Analysis Prepared by: Paula Villescaz / HEALTH / (916) 319-2097 FN: 0003328
Date of Hearing: May 9, 2018
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
ABPCA Bill Id:AB 2843
Author:(Gloria) – As Amended Ver:March 23, 2018
Policy Committee: | Health | Vote: | 11 - 4 |
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill allows Mental Health Services Act (MHSA) funds subject to reversion from counties to be redistributed to cities, special districts, school districts, or other public entities, in addition to counties. Current law allows reverted funds to be allocated only to counties.
FISCAL EFFECT:
As this bill simply allows money to be allocated to different public entities but does not develop a process to award money, it does not effectuate anything on its own. However, to award funds as this bill proposes, the Mental Health Services Oversight and Accountability Commission (commission) or another state agency would likely incur significant costs to develop and implement new funding programs relevant to these public entities (Mental Health Services Fund state administrative set-aside). The amount that may be reverted and available for allocation cannot be estimated.
COMMENTS:
- Purpose. Current law generally allows counties three years to spend MHSA funds, after which the money reverts back to the state to be reallocated. This bill is intended to allow access to reverted funds to additional entities to ensure they are spent in a beneficial manner.
- Background. Proposition 63, the MHSA, was passed by voters in November 2004. The MHSA imposes a 1% income tax on personal income in excess of $1 million to fund counties for a broad continuum of mental health prevention, early intervention, and other services. It also charges the commission and Department of Health Care Services (DHCS) with overseeing aspects of MHSA implementation.
The state auditor, among others, has raised concerns about local mental health agencies accumulating MHSA funds. DHCS estimated local behavioral health agencies statewide had unspent funds of $231 million—not including reserves—as of the end of fiscal year 2015–16 that should have reverted to the state for reallocation. The auditor also noted local behavioral health agencies had amassed nearly $2 billion in unspent MHSA funds in excess of reserves as of this fiscal year.
To address these issues, AB 114 (Committee on Budget), Chapter 38, Statutes of 2017, enacted a number of changes intended to enhance fiscal oversight. AB 114 also deemed all unspent funds subject to reversion as of July 1, 2017, to have been reverted to the Mental Health Services Fund and reallocated to the county of origin for their original purposes. However, if counties continue to amass funds, additional funds might become subject to reversion.
- Support and Opposition. San Diego City Council Member Chris Ward supports this bill, noting many of the city's homeless persons are in need of mental health services. Counties oppose this bill, arguing it is a flawed approach to allocating MHSA funds that will result in less coordination and disrupt local planning processes.
- Staff Comment. Because the MHSA was created by proposition, any amendment must be consistent with and further the purposes of the act. Because this bill changes the allocation of funds and because the ultimate use of the funds provided to other governmental entities is unknown, it is uncertain this bill is consistent with and further the purposes of the act.
Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081
Date of Hearing: April 17, 2018
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
ABPCA Bill Id:AB 2843
Author:(Gloria) – As Amended Ver:March 23, 2018
SUBJECT: Mental Health Services Fund.
SUMMARY: Adds cities, special districts, school districts, or other public entities to the list of entities eligible to receive an excess of Mental Health Services Act (MHSA) funds subject to reversion for the provision of mental health services consistent with the intent of the MHSA.
EXISTING LAW:
- Establishes the MHSA, enacted by voters in 2004 as Proposition 63, to provide funds to counties to expand services, develop innovative programs, and integrated service plans for mentally ill children, adults, and seniors through a 1% income tax on personal income above $1 million.
- Specifies that the MHSA can only be amended by a two-thirds vote of both houses of the Legislature and only as long as the amendment is consistent with and furthers the intent of the MHSA. Permits provisions clarifying the procedures and terms of the MHSA to be added by majority vote.
- Establishes the Mental Health Services Fund (Fund) to be disbursed as follows:
- Twenty percent of funds distributed to counties to be used for prevention and early intervention programs;
- Five percent of the total funding for each county mental health program to be utilized for innovative programs;
- Requires the balance of funds to be distributed to county mental health programs for services to persons with severe mental illnesses, for the children’s system of care, and for the adult and older adult system of care;
- Permits no more than 20% of the average amount of funds allocated to a county for the previous five years to be used for technological needs and capital facilities, human resource needs, and for counties to establish a prudent reserve to ensure services do not have to be significantly reduced in years in which revenues are below the average of previous years;
- Permits up to 5% of funds to be used for planning costs including for county mental health programs to pay for the costs of consumers, family members, and other stakeholders to participate in the planning process and for the planning and implementation required for private provider contracts to be significantly expanded to provide additional services; and,
- Requires, prior to making the allocations in a) through d) above, up to 5% of funds to be reserved for the costs for the State Department of Health Care Services (DHCS), the California Mental Health Planning Council, the Office of Statewide Health Planning and Development (OHSPD), the Commission, the State Department of Public Health, and any other state agency to implement all duties pursuant to the MHSA.
- Requires all expenditures for county mental health programs to be consistent with a currently approved mental health plan or update.
- Deems all unspent funds subject to reversion as of July 1, 2017, to have been reverted to the Fund and reallocated to the county of origin for the purposes for which they were originally allocated.
- Requires DHCS, on or before July 1, 2018, in consultation with counties and other stakeholders, to prepare and submit a report to the Legislature identifying the amounts that were subject to reversion prior to July 1, 2017, including to which purposes the unspent funds were allocated.
- Requires DHCS to provide to counties the amounts it has determined are subject to reversion, and provide a process for counties to appeal this determination.
- Requires counties with unspent funds subject to reversion, that are deemed reverted and reallocated, to prepare and submit a plan (by July 1, 2018) to expend these funds on or before July 1, 2020.
- Restarts the three-year clock on expenditure of Innovation funds when a county's Innovation Plan has received approval by the Mental Health Services Oversight and Accountability Commission (Commission).
- Authorizes small counties, with a population of less than 200,000, to expend MHSA funds for up to five years before unspent funds will be reverted to the state.
- Requires DHCS, in consultation with the Commission and the County Behavioral Health Directors Association of California (CBHDA), to develop and administer instructions for the Annual MHSA Revenue and Expenditure Report (Report). Requires that the instructions include a requirement that the county certify the accuracy of this report.
- Requires counties to submit the report electronically to DHCS and to the Commission. Requires DHCS and the Commission to annually post each county’s report on its website in a timely manner. Requires DHCS, in consultation with the commission and CBHDA, to revise these instructions by July 1, 2017, and as needed thereafter, to improve the timely and accurate submission of county revenue and expenditure data. Specifies the purpose of the Report.
- Requires DHCS, by October 1, 2018, and by October 1 of each subsequent year, in consultation with counties, to publish on its Internet Website a report detailing funds subject to reversion by county and by originally allocated purpose.
- Requires that, on or after July 1, 2017, funds subject to reversion be reallocated to other counties for the purposes for which the unspent funds were initially allocated to the original county.
FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.
COMMENTS:
- PURPOSE OF THIS BILL. According to the author, California voters recognized the need to provide mental health services to some of our most vulnerable populations with the passage of Proposition 63 in 2004. They did not expect, however, that over the following decade since its passage, nearly $2.5 billion in MHSA funds would go unspent. More specifically, as of September 2017, $231 million of that $2.5 billion should have been reverted back to the state for reallocation as a result of local mental health agencies’ failure to meet expenditure timelines. This bill allows other public entities the opportunity to step up to address our mental health crisis by making reverted MHSA funds – funds that local mental health agencies have not expended nor set aside in reserves – available for uses consistent with the MHSA.
- BACKGROUND.
- Proposition 63. Proposition 63 was passed by voters in November 2004. The MHSA imposes a 1% income tax on personal income in excess of $1 million and creates the 16 member Commission charged with overseeing the implementation of MHSA. The 2016-17 Governor’s Budget projected that $1.9 billion in revenue would be deposited into the Fund in fiscal year 2017-18. The MHSA addresses a broad continuum of prevention, early intervention, and service needs, as well as provided funding for infrastructure, technology, and training needs for the community mental health system. In addition to local programs, the MHSA authorizes up to 5% of revenues for state administrative functions performed by a variety of state entities such as the DHCS and OSHPD. It also funds evaluation of the MHSA by the Commission, which was established by the MHSA. Unspent MHSA funds are required to be placed in a reserve in accordance with an approved plan, and funds allocated to a county that have not been spent for their authorized purpose within three years are required to revert those funds back to the state.
- Commission. MHSA requires each county mental health department to prepare and submit a three-year plan to DHCS that must be updated each year and approved by DHCS after review and comment by the Commission. In their three-year plans, counties are required to include a list of all programs for which MHSA funding is being requested and that identifies how the funds will be spent and which populations will be served. Counties must submit their plans for approval to the Commission before the counties may spend certain categories of funding.
- Funding. The MHSA provides funding for programs within five components:
- Community Services and Supports: Provides direct mental health services to the severely and seriously mentally ill, such as mental health treatment, cost of health care treatment, and housing supports. Regulation requires counties to direct the majority of its Community Services and Supports funds to Full‑Service Partnerships (FSPs). FSPs are county coordinated plans, in collaboration with the client and the family to provide the full spectrum of community services. These services consist of mental health services and supports, such as peer support and crisis intervention services; and non-mental health services and supports, such as food, clothing, housing, and the cost of medical treatment;
- Prevention and Early Intervention: Provides services to mental health clients in order to help prevent mental illness from becoming severe and disabling;
- Innovation: Provides services and approaches that are creative in an effort to address mental health clients’ persistent issues, such as improving services for underserved or unserved populations within the community;
- Capital Facilities and Technological Needs: Creates additional county infrastructure such as additional clinics and facilities and/or development of a technological infrastructure for the mental health system, such as electronic health records for mental health services; and,
- Workforce Education and Training: Provides training for existing county mental health employees, outreach and recruitment to increase employment in the mental health system, and financial incentives to recruit or retain employees within the public mental health system.
- State Auditor Report and Recommendations. On February 27, 2018, the State Auditor released a report entitled "Mental Health Services Act: The State Could Better Ensure the Effective Use of Mental Health Services Act Funding" (Audit Report), at the request of the Joint Legislative Audit Committee. The Audit Report concluded that despite having significant responsibility for the MHSA program since 2012, DHCS has not developed a process to recover unspent MHSA funds from local mental health agencies after the statutory time frames for spending the funds have elapsed, known as reversion. As a result, the local mental health agencies have had less incentive to spend MHSA funds in a timely manner and had amassed unspent funds of $231 million as of the end of fiscal year 2015–16 that they should have reverted to the State for it to reallocate to other local mental health agencies. This figure does not include funds held in reserves or interest earned on the unspent funds. However, the Audit Report noted that the Legislature enacted a one‑time change in state law in 2017 that allowed local mental health agencies to retain all funds that were subject to reversion as of July 1, 2017. The Audit Report concluded that nevertheless, this one‑time allowance did not resolve the larger issue that DHCS has been slow in implementing a process to revert unspent MHSA funds. The State Auditor recommended, in order to ensure that local mental health agencies spend MHSA funds in a timely manner, that DHCS implement a fiscal reversion process to reallocate to other local mental health agencies any MHSA funds that are unspent within the statutory reversion time frames. The State Auditor also recommended that DHCS clarify that the interest that local mental health agencies earn on unspent MHSA funds is also subject to reversion requirements and should establish an MHSA reserve level that is sufficient but not excessive.
- SUPPORT. San Diego City Councilmember Christopher Ward states in support of the bill that California is facing a severe mental health crisis despite the availability of significant funding specific to providing mental health services. The City of San Diego is suffering from a homelessness crisis and many of those unsheltered on our streets are in need of mental health services. The City's resources are insufficient to fully and appropriately respond to this specific need. This bill could provide additional support services to help handle mental health and social needs where the funds exist but are not otherwise serving the public.
- OPPOSITION. The California Behavioral Health Directors Association, California State Association of Counties, Rural County Representatives of California, Urban Counties of California, write as a coalition (the Coalition) in opposition that the MHSA was created to support counties in addressing the urgent need for expanding accessible, recovery-based community health services. This funding has expanded and transformed the public mental health system to achieve results such as a reduction in incarcerations, school failures, unemployment and homelessness for individual living with mental health issues. The Coalition states that many of the most effective MHSA interventions are accomplished in collaboration with county affiliates, schools, school districts, and other local entities. Nothing in current law hinders such collaboration. In fact, the Coalition notes, there are hundreds of MHSA programs already operating in collaboration with local public schools, city policy departments, and other local public entities. The Coalition argues that this bill sidesteps the leadership role and legal responsibility that counties play in California in meeting the health and human service needs of low-income, vulnerable Californians with mental health needs. Shifting funds away from counties will result in a disruption of local planning and the priorities that have already been set in communities with respect to coordinated efforts between counties, schools, and other local agencies. The Coalition further notes that AB 114 (Committee on Budget), Chapter 38, Statutes of 2017, comprehensively addressed the issue of what happens to funds that remain in county accounts after a certain period of time, also known as "reversion." These recent statutory changes requires counties to submit a plan to DHCS for expending all unallocated funds by July 1, 2018, and the counties have until 2020 to expend these funds. The Coalition concludes that these changes have already established a balanced approach to MHSA reversion for both the past and the future, thereby providing continuity and predictability to counties and their local providers moving forward.
- RELATED LEGISLATION. AB 2619 (Allen) would appropriate $10 million from the General Fund to DHCS to allocate the appropriated funds to county mental health programs for the purpose of funding innovative programs to provide mental health services to California’s homeless population. This bill is pending in the Assembly Health Committee and is scheduled to be heard on April 17, 2018.
- PREVIOUS LEGISLATION.
- AB 462 (Thurmond), Chapter 403, Statutes of 2017, authorizes the Director of Employment Development Department to share information with the Commission related to quarterly wage data to assist the Commission in fulfilling its duties under the MHSA, to the extent permitted under applicable federal statute and regulation. Declares it the intent of the Legislature to authorize the Commission to receive information held by other state agencies, as it relates to outcomes established under the MHSA, for purposes of monitoring outcomes and improving the mental health system.
- AB 1134 (Gloria), Chapter 412, Statutes of 2017, authorizes the Commission to establish a fellowship program for the purpose of providing an experiential learning opportunity for a mental health consumer and a mental health professional.
- SB 192 (Jim Beall) would require counties, or counties acting jointly, seeking funding from the MHSA Reversion Fund, to demonstrate to the Mental Health Services Oversight and Accountability Commission that funding will be used to create, or expand, existing capacity for services and supports that address unmet community needs. SB 192 is pending in the Assembly Health Committee.
- AB 2279 (Cooley) of 2015 would have required DHCS to develop and administer instructions for the compilation of revenue and expenditure information related to the MHSA by counties, in consultation with the Commission and CBHDA, as specified. AB 2279 was vetoed, by the Governor, who stated:
“I am returning Assembly Bill 2279 without my signature. This bill requires the DHCS to annually compile and publicly report financial data and program information from counties on their MHSA expenditures. DHCS is already in the process of collecting and posting county revenue and expenditure reports as well as updated three year program expenditure plans, which will provide much of the information outlined in this bill. I encourage the Legislature and interested stakeholders to continue to work with the department to identify useful information that can be integrated into the existing reports to improve transparency and accountability in the use of these funds.”
- POLICY COMMENT. As noted above, the State Auditor also recommended that DHCS clarify that the interest that local mental health agencies earn on unspent MHSA funds is also subject to reversion requirements and should establish an MHSA reserve level that is sufficient but not excessive. The author may wish to consider amending the bill to clarify that interest is subject to reversion.
REGISTERED SUPPORT / OPPOSITION:
Support
City of San Diego, Council District Three
Opposition
California Behavioral Health Directors Association
California State Association of Counties
Rural County Representatives of California
Urban Counties of California
Analysis Prepared by: Paula Villescaz / HEALTH / (916) 319-2097
Discussed in Hearing
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