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Newsom is proposing a boost in mental health funding. Why children’s advocates are worried

Neighborhood resource coordinators Jawid Sharifi (center) and Gustavo Tellez, right, meet with unhoused residents at a homeless encampment on W Street and Alhambra Boulevard in Sacramento on April 11, 2023.
Rahul Lal
Neighborhood resource coordinators Jawid Sharifi (center) and Gustavo Tellez, right, meet with unhoused residents at a homeless encampment on W Street and Alhambra Boulevard in Sacramento on April 11, 2023.

The spending change would prioritize housing for homeless people, which children’s mental health advocates fear will cut their funding.

Come March, California voters will get the chance to weigh in on sweeping changes proposed by Gov. Gavin Newsom to the state’s mental health funding system — including a $4.68 billion bond measure to add treatment beds — but critics say the proposal pits children’s mental health services against the state’s ballooning homelessness crisis.

Newsom announced his intent in March to divert nearly one-third of the state’s Mental Health Services Act money — roughly $1 billion — to housing homeless individuals with severe mental illness or drug addiction.

“We have to address and come to grips with the reality of mental health in this state and our nation,” Newsom said at the time.

The announcement was met with praise from legislative leaders and alarm by children’s mental health advocates who fear cuts to their services. Today Newsom’s office released long-awaited details.

Key changes to the Act include:

  • Allocating 30% of the state’s Mental Health Services Act budget to housing those with severe mental illness or substance use disorders. Half of that money would be reserved for chronically homeless people;
  • Directing 35% of the money to full-service partnerships, which provide 24/7 wraparound services like case management, clinical treatment and social supports;
  • Earmarking 15% of money for early intervention programs and 5% for prevention programs. Eliminating the 5% innovation fund, which has historically been used to jumpstart programs for communities of color and LGBTQ folks;
  • Making people with substance use disorders eligible for services;
  • Adding 10,000 treatment beds if the bond measure passes;
  • Adding $36 million to shore up workforce development.

About one-third of the county mental health infrastructure in the state is supported by the Mental Health Services Act, which was approved by voters in 2004 as a ballot initiative that levied a 1% tax on the state’s millionaires. Substantial changes to the act, like the ones proposed, are subject to further voter approval. Last year the tax generated about $3.8 billion.

“They don’t seem to have done any analysis on what they’re giving up to have this $1 billion for housing.”

Democratic legislators Sen. Susan Talamantes-Eggman, from Stockton, and Assemblymember Jacqui Irwin, from Thousand Oaks, authored the bills detailing the proposed changes.

Sacramento Mayor Darrell Steinberg said updates to the act are long overdue. Steinberg co-authored the original measure when he was an Assemblymember.

“I am 1,000% behind this modernization,” Steinberg said during today’s news conference.

The original intent of the act was to prioritize services for people “whose lives are most at risk,” Steinberg said, criticizing counties that currently “do their best to use nearly $4 billion annually on people who need help, but without any clear state and societal priorities driving their investments.”

When Newsom announced his proposal in March, county behavioral health leaders countered that this money is the only funding source that gives them broad flexibility to focus on local priorities and any changes will result in program cuts. The money is “braided into the fabric of all things in our safety net,” said Michelle Doty Cabrera, executive director of the County Behavioral Health Directors Association, at the time.

Children’s mental health advocates also said the new proposal details fail to address their earlier concerns about cuts to youth services, which include local at-risk youth centers, LGBTQ+ programs, school-based suicide prevention programs, and infant and early childhood mental health consultations.

“They don’t seem to have done any analysis on what they’re giving up to have this $1 billion for housing,” said Lishaun Francis, senior director of behavioral health at Children Now. “It’s an interesting time to make a change that seemingly shifts resources away from young people.”

Mental health among youth worsened during the COVID-19 pandemic, with one survey showing 63% of middle and high school students reported having had an emotional meltdown, 43% reported panic or anxiety attacks, and 19% described suicidal thoughts between April 2020 and March 2021.

In 2021, Newsom and the Legislature allocated $4.4 billion to a Children and Youth Behavioral Health Initiative, but people who provide services to young folks say that was a one-time investment — it doesn’t replace ongoing money they currently get from the Mental Health Services Act.

But Secretary of Health and Human Services Dr. Mark Ghaly said the proposed changes cannot be considered alone. In addition to the one-time $4.4 billion investment, the state has added money outside of the Mental Health Services Act to mental health and substance use prevention programs, which includes youth programs.

“Compared to 20 years ago, not only do we have a number of new programs, we have a number of new opportunities to bring funding to those programs,” Ghaly said. “It is our belief that even though we are today really helping focus on some of the Californians with the most severe conditions, we also are in a much different better place to promote and support the prevention programs.”

The measure creates an early intervention program that earmarks funds to reduce suicide, incarceration and school failure as well as establishing early-psychosis interventions. Steinberg said it invests the same amount of prevention funds as the current Mental Health Services Act in a “more focused and targeted way.”

But children’s mental health advocates say that’s not what they were asking for. The current funding system carves out money specifically for prevention and early intervention programs among youth. This version creates a “catch-all” fund that isn’t set aside for young people, said Adrienne Shilton, senior policy advocate for the California Alliance of Children and Family Services.

“In the current structure, there’s a requirement that 51% of prevention and early intervention funds are spent on children and youth. We’ve lost all of that,” Shilton said.

Addressing homelessness has been a key priority for Newsom, who made it part of his 2018 gubernatorial campaign. Since that time homelessness has increased in California by nearly 32%, with about 170,000 people living on the streets.

A new report from the UCSF Benioff Center paints a bleak picture of California’s homeless population, with two-thirds of those surveyed reporting mental illness and one-third reporting substance use. The report, which offers new insights into the state’s most visible crisis, states that loss of income was the No. 1 cause of homelessness, not mental illness or addiction.

Francis said it will be difficult come March to convince voters that funding for youth should not be sacrificed to address homelessness. She believes the state has enough resources to address both problems.

“We want to support our unhoused population but we don’t want to do that at the expense of our youth. The legislature needs to figure out how to do both, but this isn’t it,” Francis said.

CalMatters is a nonprofit, nonpartisan media venture explaining California policies and politics.