California voters next spring will get to decide on a ballot measure to create housing and treatment options, especially for homeless individuals with serious mental illness. If it passes, the measure championed by Gov. Gavin Newsom would mark the first major overhaul of the state’s community mental health system in 20 years.

The two-pronged proposition on the March primary election ballot includes a nearly $6.4 billion bond to build 10,000 treatment units and supportive housing. It also asks voters to redefine how counties spend money collected from a special “millionaire’s tax” to allocate a share of it for housing for people with behavioral health illnesses.

Newsom and supporters have promoted Proposition 1 as a way to help address the state’s deteriorating homelessness and addiction crises. They contend increased investment and an update to the state’s Mental Health Services Act is “long overdue”.

The Legislature on Thursday overwhelmingly backed his proposal, with lopsided votes to place it on the 2024 ballot. Newsom still must sign the bills, and he said he would in a written statement after a late-night vote in the Assembly.

“These measures represent a key part of the solution to our homelessness crisis, and improving mental health for kids and families,” Newsom said. “Now, it will be up to voters to ratify the most significant changes to California’s mental health system in more than 50 years.”

Opponents of the ballot measure say diverting money in the Mental Health Services Act for housing will result in up to $1 billion in cuts to current mental health programs such as outpatient care and crisis response. Other advocates criticize the governor for making last-minute changes to the bond, allowing the money to be spent on involuntary treatment institutions.

So what exactly are voters being asked to consider? Here’s how the proposal breaks down.

What is Mental Health Services Act?

The Mental Health Services Act, which voters passed as a ballot measure in 2004, levies a 1% tax on personal income more than $1 million. It passed at a time when the state’s mental health system was severely underfunded. Since then, the tax has generated an estimated $26 billion for county mental health programs. Last year the tax garnered more than $3 billion. It supports roughly one-third of the state’s mental health system.

The tax is not California’s only source of revenue for mental health programs. The state also receives money from Medi-Cal, and it spends a portion of its general fund on those services. Those sources come with strict spending limitations. For example, Medi-Cal primarily pays for treatment of mental health disorders but will not cover prevention programs. It also will not pay for inpatient treatment at a facility with more than 16 beds.

Counties have come to rely on the relative flexibility of Mental Health Services Act dollars to pay for core services like outpatient care, outreach and engagement, school-based counseling, youth wellness programs, family resource centers, and crisis response teams.

Flanked by state and local politicians, California Gov. Gavin Newsom announced the state’s plan to address homelessness across the state at Cal Expo in Sacramento on March 16. (Miguel Gutierrez Jr./CalMatters)

What does Newsom want to do?

The most significant change put forth by the governor is a requirement that counties invest 30% of their Mental Health Services Act tax dollars — roughly $1 billion based on last year’s revenue — in housing programs, including rental subsidies and navigation services. Counties would have to spend half this money on people who are chronically homeless or living in encampments. They could also use up to one quarter of the money to build or purchase housing units.

Sacramento Mayor Darrell Steinberg has been a staunch supporter of Newsom’s proposal. Steinberg was one of the co-authors of the Mental Health Services Act when he was an assemblymember in 2004.

“To put it plainly, not enough of the Mental Health Services Act dollars are getting out to the people with the most persistent mental illnesses, specifically people who are chronically homeless and living with those underlying conditions,” Steinberg said during a press call in August. “So that’s where you start.”

The ballot measure puts counties on the hook for paying for substance use disorder treatment with Mental Health Services Act money. Counties have historically paid for addiction treatment with other funding.

And, it renames the program as the Behavioral Health Services Act.

What will the bond measure do?

The second half of Newsom’s proposal places a $6.4 billion general obligation bond before voters to dramatically expand the state’s psychiatric and addiction treatment infrastructure.

Nearly $4.4 billion would go toward building inpatient and residential treatment beds and could serve 100,000 people annually, officials said. California faces a shortage of nearly 8,000 adult psychiatric beds, said Nicole Eberhart, senior behavioral health scientist for the RAND Corp., during testimony to an Assembly budget subcommittee in May. Long waitlists plague the state’s inpatient mental health system, and doctors say there’s nowhere to send stable patients who need long-term treatment focused on recovery.

Another $2 billion will go toward building permanent supportive housing, with half set aside for veterans with mental health diagnoses or addiction disorders.

How many are unhoused?

More than 170,000 Californians are unhoused, the vast majority of whom live in street encampments. California has the highest homeless rate per 10,000 people, second only to the District of Columbia, and the highest proportion of unsheltered homeless individuals in the country, according to federal data.

A landmark study by the UCSF Benioff Homelessness and Housing Initiative found about two-thirds of unhoused Californians surveyed suffered from a mental health disorder but only 19% had received recent treatment. The driving force behind homelessness, however, was most often income loss, not mental illness or addiction, according to the study.

Who are supporters?

Sen. Susan Talamantes Eggman, a Democrat from Stockton, carried the proposed reform of the Mental Health Services Act in the Legislature. During Thursday’s Senate concurrence vote, Talamantes Eggman said the way counties spend state mental health funding needs to address changes that have happened in the two decades since the act was first designed.

Assemblymember Jacqui Irwin, a Democrat from Thousand Oaks, carried the bond proposal in the Legislature.

Mayors and county supervisors from eight major regions, including San Francisco and Los Angeles, successfully lobbied to increase funding for the bond measure by $1.5 billion. City leaders were early supporters of the measure with more than two dozen submitting letters of support along with housing and homeless advocates and the National Alliance on Mental Illness California.

Who are opponents?

Peer-run and disability organizations have been the staunchest opponents to the changes proposed in the ballot measure. They argue current clients will lose treatment options and accuse Newsom’s administration of using the proposal to fund his CARE Court initiative that passed last year. That law allows a court to place someone with a serious mental illness into a court-ordered treatment program.

Groups representing people of color and LGBTQ communities also oppose the measure. They say it will eliminate prevention resources and worsen already stark disparities in access to treatment. Resource centers that target these populations are among the services most likely to get cut, county behavioral health leaders have said in public hearing.

The bond measure, which previously faced no opposition, drew fierce criticism from peer and disability advocates after last-minute amendments allowed the money to be used on involuntary treatment facilities.

“This is a really tough time for our communities,” said Paul Simmons, executive director of the Depression and Bipolar Support Alliance. “Our concern with (the proposition) is massive increases in involuntary and forced treatment.”

Children and family advocates withdrew previous opposition after securing significant concessions from the governor requiring 51% of spending on early intervention be targeted toward children and youth.

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California lawmakers endorsed Gov. Gavin Newsom’s latest plan to address the state’s worsening homeless crisis. Now, it’ll be up to voters.

“I was deeply moved by the personal stories that so many legislators have shared, showing how many of us have been touched by the mental health crisis,” Newsom said in a statement Thursday night. “These measures represent a key part of the solution to our homelessness crisis, and improving mental health for kids and families.”

The Legislature overwhelmingly passed a pair of bills on Thursday that will form a $6.4 billion bond measure on the March 2024 ballot to overhaul how the state treats mental illness, substance abuse and homelessness.

The goal of the measure is to roll back homelessness by expanding mental health treatment facilities, reducing encampments and holding local leaders accountable. It builds off last year’s passage of a plan by Newsom to compel people struggling with serious mental health issues — especially those living on the streets — into court-ordered treatment.

The ballot measure, first proposed by Newsom in January, consists of a $6.4 billion bond to add thousands of behavioral health beds and a package of reforms to revise how California pays for behavioral health care.

Up to $4.4 billion would go toward constructing, acquiring and rehabilitating more than 10,000 new treatment beds. The remaining $2 billion would pay for new permanent supportive housing for low-income Californians, including $1 billion earmarked for veterans.

The second part of the initiative would reform the state’s Mental Health Services Act, passed by California voters nearly 20 years ago to fund treatment. The law levies a 1% tax on personal incomes above $1 million and provides nearly a third of the dollars in the state’s behavioral health system.

Sen. Susan Talamantes Eggman, D-Stockton, carried that bill for Newsom and received unanimous support from her colleagues on the Senate floor.

“This is an issue that we can all agree on, that we must do better,” Eggman said. “And now, this gives us the means to be able to do better.”

That same strong bipartisan support was not given to the accompanying bond funding bill, carried by Assemblywoman Jacqui Irwin, D-Thousand Oaks. Several Republican lawmakers said the goal of the bill was laudable but the funding method was not.

“This is a huge problem — probably one of the biggest problems in the state of California — and yet it has not been made a priority,” Sen. Kelly Seyarto, R- Murrieta, said about homelessness. “We need to make it a priority for our regular budget, not incur debt.”

California Gov. Gavin Newsom listens during a news conference after signing bills in July. Lawmakers passed bills designed to bolster his plans to address mental health and homeless issues through a ballot measure in March. Renée C. Byer/rbyer@sacbee.com

How California funds mental health services

When initially passed in 2004, the law was hailed as a landmark measure that would greatly reduce homelessness while improving services to hundreds of thousands of Californians diagnosed with mental illnesses. Since then, homelessness in California has only worsened.

Newsom and supporters of his ballot measure say it’s time to update the law to address the root of the problem for many people living on California’s streets: mental illness or substance abuse.

The changes will limit the ways in which counties and service providers can use MHSA dollars, add accountability requirements to better track how funds are spent and mandate audits on the results of the state’s investments. As part of the revision, counties will be required to spend 30% of their MHSA funds on housing assistance.

Sacramento Mayor Darrell Steinberg, who wrote the Mental Health Services Act as an assemblyman, is a proponent of the changes. Steinberg recently told The Sacramento Bee that reprioritizing the spending of the funds was “appropriate” and “essential.”

The governor’s sweeping proposal faced immediate backlash from advocates, service providers and analysts who worried that the new housing mandates would jeopardize existing programs, especially those for children. Although opposition diminished as the governor made concessions to allow local officials more spending flexibility, some groups remain concerned the bill could lead to more forced commitments to locked treatment facilities.

“Basic human rights are being violated by the governor in his efforts to clear the streets and look good,” said Paul Simmons, executive director of the Depression and Bipolar Support Alliance of California. “This is not the answer. It’s more community programs, not less.”

The Bee’s Mathew Miranda contributed to this story.

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As Gov. Gavin Newsom attempts to rally support for the $4.7 billion mental health plan he wants to place before voters next year, the California Analyst’s Office is raising concerns that the proposal could actually jeopardize some ongoing services for the mentally ill.

The Analyst’s Office, which advises the Legislature on policy and fiscal matters, released a series of reports this week that criticized Newsom’s plan for adding thousands of new mental health beds and overhauling the state’s Mental Health Services Act (MHSA).

Passed by California voters in 2004 as Proposition 63, MHSA levies a 1% tax on personal incomes above $1 million to fund programs and services for Californians with serious mental health issues. The vast majority of MHSA funding goes directly to counties to use as they see fit.

Newsom has proposed a bond measure for the March 2024 ballot that would raise $4.7 billion to add up to 10,000 behavioral health beds in California. It would also make several significant changes to MHSA, including requiring counties to move funds from prevention into housing for the mentally ill and to reduce the amount of cash jurisdictions are allowed to keep in reserve.

The measure is Newsom’s latest effort to reduce encampments by treating and housing people dealing with a combination of homelessness, substance abuse or severe mental illness. It builds off of CARE Court, a new law he signed last year to compel residents struggling with mental health and addiction into court-ordered treatment.

The Analyst’s Office said that the proposed changes to MHSA would reduce funding for certain programs and could “discourage ongoing spending commitments that may help counties provide more consistent and successful mental health services.”

California Gov. Gavin Newsom meets Wednesday with a coalition of behavioral health reform leaders and local elected officials at his swing space office near the state Capitol.

“We find that the administration’s justification of its proposed changes is incomplete,” a report from the LAO reads, adding that the Newsom Administration has not assessed how such changes may negatively impact current services.

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“For example, while the administration cites the shortfall in psychiatric treatment beds as a primary justification for the focus on housing interventions, the administration has not provided the rationale for using MHSA — given the trade-offs — to address this and other issues,” the report continues.

The LAO is recommending the state legislature demand answers and hold the Newsom Administration accountable before approving the pair of bills that would form the March 2024 ballot measure. The bills need support from two-thirds of lawmakers.

Sacramento Mayor Darrell Steinberg, who co-authored the legislation behind MHSA as an assemblyman, said Thursday that he respectfully disagreed with the LAO’s criticisms.

“The governor for the first time is seeking to articulate statewide societal priorities for the expenditure of this money and I think that is not only appropriate, but essential,” Steinberg said. “The bills that laid the foundation for MHSA focused on people who are chronically homeless, living with mental illness. Despite our best intentions and best work, that’s not where a lot of this money is currently going.”

In response to a request for comment, Newsom spokesperson Brandon Richards did not directly address the criticisms made by the LAO. Instead, Richards said in a statement that the status quo was “not acceptable” and that MHSA needed to adapt to address “close gaps” in the state’s health care system.

The report came out a day after Newsom held a round table discussion with state and local officials and behavioral health advocates to bolster support for his plan. After the meeting, the governor told reporters he was aware of concerns about how the measure could disrupt programs and services. Newsom said members of his administration were meeting with critics and open to considering adjustments but did not specify what those might be.

“We’re hopeful that we can put a package to the voters that will be overwhelmingly supported,” Newsom said, “and that will put those dollars to use early next year.”

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