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Prop 1E Threatens Mental Health Services for Needy

As you know, the budget package adopted recently calls for a May 19 special election and puts six ballot measures before voters. One of these initiatives, Proposition 1E, asks voters to approve the diversion of $460 million over two years from Mental Health Services Act (MHSA) revenues to the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program, which federal law requires California to fund. If Proposition 1E does not pass, the state is still obligated to fund the EPSDT program using State General Funds.


The California Mental Health Directors Association has serious concerns about the impact this proposed diversion of MHSA funds could have on the more than 600,000 mental health consumers we serve in all 58 counties, and on the many thousands who still remain unserved. A $460 million hit on MHSA funds, on top of other local and state revenue reductions, will inevitably impact counties’ ability to serve the people in our communities with serious mental illnesses. It could also result in more homelessness, hospitalizations, and increased pressure on our social safety net, costing taxpayers more in the long run.

CMHDA has developed this informational memo to assist you as you report on the budget agreement and Proposition 1E.

Potential Proposition 1E Impacts
Proposition 1E would impact counties’ ability to provide mental health services to people in need, and lead to long-term adverse consequences for our communities and taxpayers.

  • Threatens mental health services for people in need. CMHDA’s number one priority is protecting direct mental health services for people in need. A $460 million diversion of funding will severely impact counties’ ability to serve the people in our communities with serious mental illnesses who turn to county mental health programs when no other assistance is available to them. There is no question that a funding diversion of this magnitude will result in significantly fewer people being served by our state’s public mental health system. If approved, Proposition 1E would set back the progress we have made under Proposition 63 in reaching more people in need and shifting away from a more costly “institution-only” system in favor of community care.
  • Higher costs to taxpayers. A two-year diversion of MHSA funds will likely result in higher costs to taxpayers in the long run. Since the passage of Proposition 63, California has served over 200,000 more Californians living with serious mental illness and realized significant savings for taxpayers. Counties are providing effective mental health and support services in our communities, and diverting people with mental health needs from much more costly consequences. The non-partisan Legislative Analyst’s Office notes that reducing Proposition 63 programs through Proposition 1E could result in state and local governments incurring “added costs for homeless shelters, social services programs, medical care, law enforcement, and county jail and state prison operations.” For example, the average annual cost for a county jail inmate is $94,000, while community-based mental health care can be provided for as little as $16,000 per year.
  • Diminished local safety net. At a time when state funding for all health and human service programs is being sharply reduced, MHSA provides one of the few flexible funding streams available to counties to meet the needs of their most severely mentally ill local residents.

Unlike other social services, mental health services are not funded as entitlement programs, and operate on the thinnest of financial margins, as funding has not kept pace with inflation or caseloads. Over the past several years, county mental health programs have suffered major cutbacks due to reduced sales tax and vehicle license fees, reduced state Medi-Cal payments to counties, and the elimination of state-funded programs such as the Homeless Mentally Ill (AB 2034) and Children’s System of Care programs.

The Mental Health Services Act (MHSA), or Proposition 63, was passed resoundingly in 2004 by California voters who recognized the dire need to address decades of inadequate state funding for mental health services. The initiative generated new revenues to expand the state’s mental health services and reach the estimated 60% of Californians living with disabling mental illness who were not treated under the then-existing system.

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Proposition 63 is working as the voters intended.
To date, 210,000 Californians have accessed community mental health services either fully or partially funded by the MHSA. The fiscal wisdom of treating people living with mental illness in our own communities — rather than homeless shelters, hospitals or the criminal justice system — has also been borne out in the thousands of people diverted from costly institutions. Consider the following examples:

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  • Counties have reported dramatically reduced use of emergency room visits for mental health visits among MHSA program participants. In Orange County, collaboration between law enforcement and psychiatric emergency response teams has created a 65% diversion from hospitalization.
  • In San Francisco County, transition age youth (18-25) MHSA program participants achieved a 76% reduction in days homeless and 49% reduction in days hospitalized.
  • In Sacramento County, MHSA program participants achieved a 89% reduction in days they spent homeless.
  • In Los Angeles County, MHSA program participants achieved a 83% decrease in days they spent homeless and a 40% decrease in incarceration.
  • In Kern County, MHSA program participants achieved a 77% reduction in days they spent homeless and a 71% reduction in incarceration

Proposition 63 explicitly prohibited its funds from being used to backfill other programs.
Recognizing that transforming our chronically underfunded mental health system would require sustained investment, the MHSA expressly prohibited its funds from being used to replace other state or county mental health funding. Proposition 1E would break that commitment.

Patricia Ryan

Patricia Ryan

The California Mental Health Directors Association is available to answer additional questions regarding California’s mental health funding system, and the impact of Proposition 1E. Please feel free to contact Patricia Ryan at (916) 558-3477.

Patricia Ryan

Patricia Ryan is the Executive Director of the California Mental Health Directors Association and oversees their government relations and advocacy activities, including ongoing policy issue identification, analysis and advocacy. Her father was the late Congressman Leo J. Ryan, whom many of you may remember as the Congressman who was killed over 25 years ago in Jonestown, Guyana.

The California Mental Health Directors Association (CMHDA) is a non-profit advocacy association representing the mental health directors from each of California's 58 counties.

Reprinted with permission from the California Progress Report.