Mental Health Services Act: Governor’s Behavioral Health Modernization Proposal

Key Takeaways for the Legislature

• Recommend Rejection of Governor’s Proposal to Reduce Allowable County Reserves. In light of extreme Mental Health Services Act (MHSA) revenue volatility, allowable county reserves would have to be around two-thirds higher than their current levels to provide reasonable protection against declines in revenue. The Governor’s proposal would therefore move allowable reserves in the wrong direction. In addition, we think counties should generally have more flexibility in how they can deposit and use reserves and offer suggestions for how to improve the overall MHSA reserve policy.
• Recommend Addressing MHSA Revenue Volatility Head On. The volatile MHSA tax is not suited to supporting ongoing mental health services and sufficiently mitigating MHSA revenue volatility with a reserve policy alone would be challenging. A more straightforward approach would be to change the MHSA revenue source. We offer an option that we think has little downside from either the state’s or counties’ perspectives.
• Administration’s Justification of Proposed Changes Incomplete. The administration’s proposal would reduce county spending flexibility and shift the focus of MHSA funding to Full-Service Partnerships and housing interventions. We find that the proposal likely will result in counties spending less on a number of current programs funded through MHSA, potentially reducing outpatient services, crisis response, prevention services, and outreach. We find that the administration’s justification for the proposal is incomplete and we provide several questions for the Legislature to ask the administration to assess whether the proposal is warranted. For example, can the administration provide evidence that the proposal is likely to result in better behavioral health outcomes for the population as a whole?
• Recommend Maintaining Mental Health Services Oversight and Accountability Commission’s Authority Absent Compelling Justification for Governor’s Proposal. While the commission would continue to serve in an advisory role to the administration and the Legislature under the Governor’s proposal, the Governor proposes to remove most of the commission’s current oversight, regulatory, and programmatic authority over MHSA funding. We find that the proposed substantial reduction of the commission’s authority would limit its independence. Given the lack of analysis provided by the administration on the potential benefits of its proposal, we recommend the Legislature consider maintaining the commission’s current roles in providing general oversight as well as implementing certain components of the MHSA. Additionally, we recommend maintaining the commission’s authority to receive all information requested of state departments and all state and local entities that receive MHSA funding at its independent discretion.
• Uncertain Whether Current Level of Mental Health Services Act (MHSA) Spending by Counties on Children and Youth Services Would Be Maintained. The Governor’s proposal shifts MHSA funding towards Full-Service Partnerships (FSPs) and housing interventions and away from other services, such as outpatient or crisis intervention services. While there could be an increase in MHSA funding for children and youth services within FSPs, there likely would be a reduction in MHSA funding available for other children and youth services. On net, we find that whether the current level of county MHSA spending—particularly at the county level—on children and youth services would be maintained is uncertain.
• Alternatives Available to Require Spending on Children and Youth Services. Current regulations require a certain level of MHSA funding for children and youth mental health services, but there is no such statutory requirement included in the Governor’s proposal. Should maintaining spending on children and youth services be a priority for the Legislature, there are a number of ways that the Legislature could amend the Governor’s proposal to include a children and youth mental health services funding requirement, such as by requiring a percentage of total county MHSA revenue to be spent on children and youth services.
• Bond Appears Broadly Reasonable and Worthy of Consideration. The state has previously funded housing and homelessness programs for veterans and others with behavioral health needs. Similarly, the state has recently created the Behavioral Health Continuum Infrastructure Program to fund additional behavioral health facilities. The shortage in both housing and behavioral health facilities is well documented and a pressing need. Thus, in our view, the Governor’s proposed bond is broadly reasonable.
• Recommend Increased Legislative Role in Bond Implementation and Oversight. The Governor proposes a limited role for the Legislature in the design and implementation of the bond. We recommend that the Legislature amend the statutory proposal to provide more direction to the administration and ensure an ongoing legislative role in the bond’s implementation. For example, we recommend the Legislature make the expenditure of the bond funds for programmatic purposes subject to appropriation in the annual budget act to ensure the administration is on the right track in its targeting of grants. We also think the Legislature will want to consider having an increased role in determining key implementation details, such as grant eligibility and allocation methodology. The Legislature will also want to consider oversight and reporting requirements to gauge the extent to which the bond is meeting legislative goals now and in the future.