ASSEMBLY THIRD READING

ATR Bill Id:AB 2576

Author:(Gloria)

As Amended Ver:June 8, 2020

2/3 vote

SUMMARY:

Provides that Mental Health Services (MHSA) funds subject to reversion are to be reallocated to other counties. Requires a county to develop a plan for the utilization of the reallocated funds with the input of specified stakeholders and to conduct a local review process. Requires that consideration be given to using the reallocated funds to provide services to individuals with mental illness who are also experiencing homelessness or who are involved in the criminal justice system and to provide early intervention services to youth. Requires each county to report annually to the Legislature the number of individuals who are experiencing homelessness who are receiving mental health services that are paid for using MHSA funds.

Major Provisions

COMMENTS:

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 and created the 16 member Mental Health Services Oversight and Accountability Commission (MHSOAC) charged with overseeing the implementation of MHSA. The MHSA addresses a broad continuum of prevention, early intervention and service needs as well as providing funding for infrastructure, technology, and training needs for the community mental health system.

Early in 2018, the California State Auditor (CSA) released a report entitled, 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 CSA evaluated the effectiveness of both the Department of Health Care Services (DHCS) and MHSOAC in providing oversight of MHSA funding. The Audit Report found that DHCS and MHSOAC did not enforce annual revenue and expenditure reporting nor had it performed fiscal or program audits to ensure local mental health agencies complied with fiscal and program requirements. The Audit Report concluded that despite having significant responsibility for the MHSA program since 2012, DHCS had 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. The MHSOAC stated in the Audit Report that the fiscal transparency tool was a first step in its plan to develop online tools to enhance public accountability for the local mental health agencies' spending of the MHSA funds. CSA 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 frame.

MHSA originally specified that funds had to be spent within a certain time period or they would revert to the state for other counties' use. It further stated that funds dedicated to prudent reserves are exempt from reversion. AB 114 (Budget Committee) Chapter 38, Statutes of 2017, further modified the MHSA reversion policy to state that unspent funds subject to reversion as of July 1, 2017, were deemed reverted and reallocated to the county of origin. The effect was that no funds were subject to reversion prior to July 1, 2017. AB 114 also requires that counties must have a plan for how these reallocated funds would be spent and stipulates that reallocated funds must be spent by July 1, 2020, or they revert to the State.

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 MHSA, in 2004. In the years since its enactment, the Legislature has made a number of modifications to the MHSA, including increased oversight on the existing reversion process and establishing reserve levels for each county mental health program. Simultaneously, California's housing and homelessness crises have intensified at staggering rates. For those that were not already displaying a mental health disorder at the point they first experienced homelessness, a significant number of Californians soon display such a disorder the longer they remain unsheltered. This bill recognizes the changing behavioral health needs in California thereby requiring unspent, reverted MHSA funds to be used for the purposes of providing services to people with mental illness who are also experiencing homelessness.

Arguments in Support:

The American Federation of State, County and Municipal Employees AFL-CIO states in support that the need for adequate mental health services and how to successfully transition those who are experiencing homelessness are two major areas both the state and federal government have grappled with in recent years. These two areas have come more into focus since the outbreak of COVID-19 and stay-in-place orders. Mental health is something that can be affected by isolation and Californians experiencing homelessness are some of those most vulnerable to contracting the virus. During this pandemic especially, it is critical that Legislature focus on the mental health and stability of those also experiencing homelessness.

Arguments in Opposition:

The California Behavioral Health Directors Association (CBHDA) in a support if amended position, requests amendments to ensure the proposed changes do not overlook the importance of the local stakeholder and approval process. CBHDA supports this bill if the distribution of reverted funds to the designated populations is subject to local decision-making. Note: the most recent amendments address these concerns.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, the fiscal impact is unknown with likely minor administrative costs to the DHCS to reallocate reverted funds to specified uses (MHSA state administrative funds). Additionally, there could be potential, likely minor, state-reimbursable mandate General Fund costs associated with the requirement to report the number of individuals experiencing homelessness who are also receiving MHSA funded services.

VOTES:

ASM HEALTH: 13-0-2

YES: Wood, Mayes, Aguiar-Curry, Bonta, Burke, Carrillo, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ABS, ABST OR NV: Bigelow, Flora

ASM APPROPRIATIONS: 13-1-4

YES: Gonzalez, Bauer-Kahan, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Petrie-Norris, McCarty, Robert Rivas

NO: Diep

ABS, ABST OR NV: Bigelow, Megan Dahle, Fong, Voepel

UPDATED:

VERSION: June 8, 2020

CONSULTANT: Judith Babcock / HEALTH / (916) 319-2097 FN: 0003031

ASSEMBLY THIRD READING

ATR Bill Id:AB 2576

Author:(Gloria)

As Amended Ver:May 4, 2020

2/3 vote

SUMMARY:

Repeals the provision in law that requires any funds allocated to a county through the Mental Health Services Act (MHSA), that have not been spent for authorized purposes within three years, to be deposited into the Reversion Account which are available for other counties in future years, and instead requires the reverted funds to be reallocated to other counties for the purposes of providing services to individuals with mental illness who are also experiencing homelessness or who are involved in the criminal justice system and providing early intervention services to youth.

Major Provisions

COMMENTS:

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 and created the 16 member Mental Health Services Oversight and Accountability Commission (MHSOAC) charged with overseeing the implementation of MHSA. The MHSA addresses a broad continuum of prevention, early intervention and service needs as well as providing funding for infrastructure, technology, and training needs for the community mental health system.

Early in 2018, the California State Auditor (CSA) released a report entitled, 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 CSA evaluated the effectiveness of both the Department of Health Care Services (DHCS) and MHSOAC in providing oversight of MHSA funding. The Audit Report found that DHCS and MHSOAC did not enforce annual revenue and expenditure reporting nor had it performed fiscal or program audits to ensure local mental health agencies complied with fiscal and program requirements. The Audit Report concluded that despite having significant responsibility for the MHSA program since 2012, DHCS had 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. The MHSOAC stated in the Audit Report that the fiscal transparency tool was a first step in its plan to develop online tools to enhance public accountability for the local mental health agencies' spending of the MHSA funds. CSA 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 frame.

MHSA originally specified that funds had to be spent within a certain time period or they would revert to the state for other counties' use. It further stated that funds dedicated to prudent reserves are exempt from reversion. AB 114 (Budget Committee) Chapter 38, Statutes of 2017, further modified the MHSA reversion policy to state that unspent funds subject to reversion as of July 1, 2017, were deemed reverted and reallocated to the county of origin. The effect was that no funds were subject to reversion prior to July 1, 2017. AB 114 also requires that counties must have a plan for how these reallocated funds would be spent and stipulates that reallocated funds must be spent by July 1, 2020, or they revert to the State.

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 MHSA, in 2004. In the years since its enactment, the Legislature has made a number of modifications to the MHSA, including increased oversight on the existing reversion process and establishing reserve levels for each county mental health program. Simultaneously, California's housing and homelessness crises have intensified at staggering rates. For those that were not already displaying a mental health disorder at the point they first experienced homelessness, a significant number of Californians soon display such a disorder the longer they remain unsheltered. This bill recognizes the changing behavioral health needs in California thereby requiring unspent, reverted MHSA funds to be used for the purposes of providing services to people with mental illness who are also experiencing homelessness.

Arguments in Support:

The American Federation of State, County and Municipal Employees AFL-CIO states in support that the need for adequate mental health services and how to successfully transition those who are experiencing homelessness are two major areas both the state and federal government have grappled with in recent years. These two areas have come more into focus since the outbreak of COVID-19 and stay-in-place orders. Mental health is something that can be affected by isolation and Californians experiencing homelessness are some of those most vulnerable to contracting the virus. During this pandemic especially, it is critical that Legislature focus on the mental health and stability of those also experiencing homelessness.

Support if Amended:

The California Behavioral Health Directors Association (CBHDA) in a support if amended position, requests amendments to ensure the proposed changes do not overlook the importance of the local stakeholder and approval process. CBHDA supports this bill if the distribution of reverted funds to the designated populations is subject to local decision-making.

Arguments in Opposition:

There is no known opposition.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, the fiscal impact is unknown with likely minor administrative costs to the DHCS to reallocate reverted funds to specified uses (MHSA state administrative funds). Additionally, there could be potential, likely minor, state-reimbursable mandate General Fund costs associated with the requirement to report the number of individuals experiencing homelessness who are also receiving MHSA funded services.

VOTES:

ASM HEALTH: 13-0-2

YES: Wood, Mayes, Aguiar-Curry, Bonta, Burke, Carrillo, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ABS, ABST OR NV: Bigelow, Flora

ASM APPROPRIATIONS: 13-1-4

YES: Gonzalez, Bauer-Kahan, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Petrie-Norris, McCarty, Robert Rivas

NO: Diep

ABS, ABST OR NV: Bigelow, Megan Dahle, Fong, Voepel

UPDATED:

VERSION: May 4, 2020

CONSULTANT: Judith Babcock / HEALTH / (916) 319-2097 FN: 0002815

Date of Hearing: June 2, 2020

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2576

Author:(Gloria) – As Amended Ver:May 4, 2020

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill requires a county’s Mental Health Services Act (MHSA) funds that remain unspent and are subject to reversion pursuant to existing law to be reallocated to other counties for the purposes of providing services to individuals with mental illness who are also experiencing homelessness or who are involved in the criminal justice system and providing early intervention services to youth.

It also requires counties to report the number of individuals experiencing homelessness who are also receiving MHSA-funded services.

FISCAL EFFECT:

1. Unknown, likely minor administrative costs to the Department of Health Care Services (DHCS) to reallocate reverted funds to specified uses (MHSA state administrative funds).
2. Potential, likely minor, state-reimbursable mandate GF costs associated with the requirement to report the number of individuals experiencing homelessness who are also receiving MHSA-funded services.

COMMENTS:

1. 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 reallocate funds to serve specified populations, including to individuals who are criminal justice-involved or experiencing homelessness, as well as youth. The author estimates $161 million in MHSA funds must be shifted to mental health services by June 30, 2020, or may be subject to reversion.
2. 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 Department of Health Care Services (DHCS) with overseeing aspects of MHSA implementation.

In recent years 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 of the MHSA. 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. SB 192 (Beall), Chapter 328, Statutes of 2019, further clarified the methodology for identifying a prudent reserve and reversion and expenditure review processes. Under current law, these reverted funds are allocated back to other counties for their original purposes.

1. Prior Legislation. AB 2843 (Gloria), of the 2017-18 Legislative Session, would have allowed 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. The bill, which required a 2/3 vote of the Legislature, failed on the Assembly Floor.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: May 18, 2020

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 2576

Author:(Gloria) – As Amended Ver:May 4, 2020

SUBJECT: Mental health.

SUMMARY: Repeals the provision in law that requires any funds allocated to a county through the Mental Health Services Act (MHSA), that have not been spent for authorized purposes within three years to be deposited into the Reversion Account which are available for other counties in future years, and instead requires the reverted funds to be reallocated to other counties for the purposes of providing services to individuals with mental illness who are also experiencing homelessness or who are involved in the criminal justice system and providing early intervention services to youth. Specifically, this bill:

1. Repeals the provision in law that requires any funds allocated to a county through MHSA that have not been spent for authorized purposes within three years to be deposited into the Reversion Account which becomes available for other counties in future years.
2. Requires that funds deposited into the Reversion Account to be reallocated to other counties for the purposes of providing services to individuals with mental illness who are also experiencing homelessness or who are involved in the criminal justice system and providing early intervention services to youth.
3. Requires each county to annually report to the Legislature the number of individuals who are experiencing homelessness who are receiving mental health services that are paid for using MHSA funds.

EXISTING LAW:

1. 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 1% income tax on personal income above $1 million.
2. Requires that MHSA funds and interest accrued from those funds, other than those appropriately placed in a reserves fund, that have been allocated to a county and that have not been spent for their authorized purpose within three years, to revert to the State Reversion Fund and be available to other counties for future years. Provides that funds allocated for capital facilities, technological needs, or education and training may be kept for a period of 10 years before reverting to the Reversion Fund.
3. Deems unspent funds subject to the reversion requirements of 2) above as of July 1, 2017, to have been reverted to the Reversion Fund and reallocated to the county of origin for the purpose they were originally allocated for.
4. Provides that funds reverted and reallocated under 3) above to again revert to the Reversion Fund if not spent by July 1, 2020.
5. 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 amended by majority vote.
6. Requires each county to prepare the Annual MHSA Revenue and Expenditure Report and to electronically submit the MHSA Report to the Department of Health Care Services (DHCS) and the Mental Health Services Oversight and Accountability Commission (MHSOAC). Requires DHCS and MSHOAC to post each county’s report in a text-searchable format on its internet website in a timely manner.
7. Establishes through adoption of a budget trailer bill, the No Place Like Home (NPLH) program, which allows the state to use up to $2 billion in bond proceeds to invest in the development of permanent supportive housing for persons who are in need of mental health services and are experiencing homelessness, chronic homelessness, or who are at risk of chronic homelessness. Provides that the bonds are repaid by funding from the MHSA.
8. Establishes the NPLH Act through passage of Proposition 2 allowing the state to use up to $140 million per year of MHSA funds to repay the up to $2 billion in bonds approved through the adoption of the No Place Like Home program (see 7) above).

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. 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 MHSA, in 2004. In the years since its enactment, the Legislature has made a number of modifications to the MHSA, including increased oversight on the existing reversion process and establishing reserve levels for each county mental health program. Simultaneously, California’s housing and homelessness crises have intensified at staggering rates. For those that were not already displaying a mental health disorder at the point they first experienced homelessness, a significant number of Californians soon display such a disorder the longer they remain unsheltered. This bill recognizes the changing behavioral health needs in California thereby requiring unspent, reverted MHSA funds to be used for the purposes of providing services to people with mental illness who are also experiencing homelessness.
2. BACKGROUND.
   1. MHSA. 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 and creates the 16 member MHSOAC charged with overseeing the implementation of MHSA. The MHSA addresses a broad continuum of prevention, early intervention and service needs as well as providing funding for infrastructure, technology, and training needs for the community mental health system.

The 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 MHSOAC. 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.

• • 1. 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;
    2. Prevention and Early Intervention: Provides services to mental health clients in order to help prevent mental illness from becoming severe and disabling;
    3. 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;
    4. 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,
    5. 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.

Counties must submit their plans for approval to the MHSOAC before the counties may spend certain categories of funding including Innovation funds.

• 1. California State Auditor (CSA) report and Reversion Policy. Early in 2018, the CSA released a report entitled, “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 CSA evaluated the effectiveness of both DHCS and MHSOAC in providing oversight of MHSA funding. The Audit Report found that DHCS did not enforce annual revenue and expenditure reporting nor had it performed fiscal or program audits to ensure local mental health agencies complied with fiscal and program requirements. The Audit Report concluded that despite having significant responsibility for the MHSA program since 2012, DHCS had 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. The MHSOAC stated in the Audit Report that the fiscal transparency tool was a first step in its plan to develop online tools to enhance public accountability for the local mental health agencies’ spending of the 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 frame.

MHSA originally specified that funds had to be spent within a certain time period or they would revert to the state for other counties’ use. It further stated that funds dedicated to prudent reserves are exempt from reversion. AB 114 (Committee on Budget) Chapter 38, Statutes of 2017, further modified the MHSA reversion policy to state that unspent funds subject to reversion as of July 1, 2017, were deemed reverted and reallocated to the county of origin. The effect was that no funds were subject to reversion prior to July 1, 2017. The new law also requires that counties must have a plan for how these reallocated funds would be spent and stipulates that reallocated funds must be spent by July 1, 2020 or they would revert to the State.

• 1. No Place Like Home (NPLH) On July 1, 2016, Governor Brown signed a budget trailer bill enacting the NPLH program to dedicate up to $2 billion in bond proceeds to invest in the development of permanent supportive housing for persons who are in need of mental health services and are experiencing homelessness, chronic homelessness, or who are at risk of chronic homelessness. The bonds are repaid by funding from the MHSA. In November 2018, voters approved Proposition 2, authorizing the sale of up to $2 billion of revenue bonds and the use of a portion of MHSA Funds for the NPLH program. Key features of the NPLH program include:
     1. Counties will be eligible applicants (either solely or with a housing development sponsor);
     2. Funding for permanent supportive housing must utilize low barrier tenant selection practices that prioritize vulnerable populations and offer flexible, voluntary, and individualized supportive services; and,
     3. Counties must commit to provide mental health services and help coordinate access to other community-based supportive services.
        

1. SUPPORT. The American Federation of State, County and Municipal Employees AFL-CIO states in support that the need for adequate mental health services and how to successfully transition those who are experiencing homelessness are two major areas both the state and federal government have grappled with in recent years. These two areas have come more into focus since the outbreak of COVID-19 and stay-in-place orders. Mental health is something that can be affected by isolation and Californians experiencing homelessness are some of those most vulnerable to contracting the virus. During this pandemic especially, it is critical that Legislature focus on the mental health and stability of those also experiencing homelessness.
2. SUPPORT IF AMENDED. The California Behavioral Health Directors Association (CBHDA) in a support if amended position, requests amendments to ensure the proposed changes do not overlook the importance of the local stakeholder and approval process. CBHDA supports the bill so long as the distribution of reverted funds to the designated populations is subject to local decision-making.
3. RELATED LEGISLATION.
   1. AB 1938 (Eggman) clarifies that to the extent MHSA funds are otherwise available for use under the act, those funds may be used to provide inpatient treatment, including involuntary treatment of a patient who is a danger to self or others or gravely disabled, in specified settings, including an acute psychiatric hospital, an institution for mental disease, and a mental health rehabilitation center, as defined. AB 1938 is pending hearing in the Assembly Health Committee
   2. AB 2265 (Quirk-Silva) authorizes expenditure of funds under the MHSA to be used to treat a person with co-occurring mental health and substance use disorders (SUD) when the person would be eligible for treatment of a mental health disorder under MHSA. AV 2265 is pending hearing in the Assembly Health Committee.
   3. SB 665 (Umberg) authorizes MHSA funds to be used to provide services to persons incarcerated in county jails or subject to mandatory supervision, except for those convicted of a felony, as specified. SB 665 is pending at the Assembly Desk.
4. PREVIOUS LEGISLATION.
   1. AB 114 (Committee on Budget) Chapter 38, Statutes of 2017, modified the MHSA reversion policy to state that unspent funds subject to reversion as of July 1, 2017, were deemed reverted and reallocated to the county of origin. Requires that counties must have a plan for how these reallocated funds would be spent and stipulates that reallocated funds must be spent by July 1, 2020 or they would revert to the State.
   2. SB 389 (Hertzberg), Chapter 209, Statutes of 2019, authorized counties to use MHSA moneys to provide services to persons who are participating in a presentencing or post-sentencing diversion program or who are on parole, probation, post-release community supervision, or mandatory supervision.

REGISTERED SUPPORT / OPPOSITION:

Support

City Councilmember Christopher Ward, City of San Diego

American Federation of State, County and Municipal Employees AFL-CIO

Opposition

None on file

Analysis Prepared by: Judith Babcock / HEALTH / (916) 319-2097