California Mental Health Finance Update

The decline in access to mental health services that NAMI members throughout California have already witnessed is likely to deepen in the next two years.  Proposition 63 (Mental Health Services Act or MHSA) and State General Fund revenues are expected to drop during the two or three “out” years--even as the recession begins to turn around. State budgets are based on taxes from previous fiscal years, and government revenues lag behind growth in the general economy. We are in for tough times.

Historical Background

The MHSA created a 1% tax on income in excess of $1 million to expand mental health services in California. After MHSA was put into place in the 2004/05 fiscal year, the revenues began to grow rapidly over the following five years, sparked by the growth in the economy. In 2005/06, MHSA's revenues were $906 million. By this fiscal year, the annual revenue had grown to approximately $1.5 billion.

Present Realities, Future Concerns

Looking ahead to 2010/11, the revenue will drop to $967 million, only slightly higher than it was five years ago. But in 2011/12, the picture looks worse as revenues fall to $782 million. Projections suggest it won't be until 2012/13 when an upward curve will begin. And this is the best-case scenario. In the worst case, approximately $100 million, in addition, will drop from the MHSA fund for each of the coming years.

In fiscal year 2009/10 we reaped the benefit of a one-time spike in available funding. In order to simply sustain the MHSA programs, without expansion, mental health directors estimate that we'll need a minimum of $900 million each year in MHSA funds. Rusty Selix of The Mental Health Association has proposed that we set aside some of the revenues from this “fat” fiscal year in order to fund MHSA administration the next two to three years when revenues will drop below the $900 million level necessary for sustainability. Opponents of this idea would rather require CDMH to implement better efficiencies in the use of MHSA administrative funds.

Realignment, Continuing Declines, and Safety Nets

Prior to Proposition 63, the mental health systems in California counties relied on Realignment funds as the primary source of income. In Realignment, the State pays counties a share of the cost of mental health services by collecting sales tax revenues and vehicle license fees. Under the recession, State sales tax revenues declined 13% in fiscal year 2008/09. In fiscal year 2009/10, revenues declined an additional 6%--for a total of 19% over two years. Vehicle license fees declined 8.5% in fiscal year 2008/09.

As a result of these reductions, county mental health systems of care experienced an overall decline of their share of Realignment funds of approximately 5%. Thus, as MHSA funds increased this fiscal year, the fund to the customary mental health systems of care decreased. Mental health directors had to look to MHSA funds to find ways to backfill for the lost revenues in basic mental health programs.

Proposition 63 was not meant to be used to fund existing programs, but only to expand existing programs. We were fortunate that a ballot measure last fall to raid Proposition 63 funds went down at the polls, but Proposition 63 funds might be are vulnerable to other forms of redistribution of funds to primary systems of care outside of the MHSA. Hopefully, MHSA will continue to be a significant source to assist in maintaining the safety net through transformed programs.

Current Reductions

Community mental health has already shouldered:

• A 50% reduction in Medi-Cal Specialty Mental Health Care.
• The elimination of state-only payment for ancillary health services provided in Institutes of Mental Disease (IMDs), cutting funding by $14 million.
• A deferment of $15.79 million in Early and Periodic Screening, Diagnosis and Treatment.
• A 50% reduction in Mental Health Services for Special Education Pupils (AB 3632).
• A cut of $90 million in funding for Proposition 36 (alcohol and drug) intervention programs.
• A cut of $2.2 million in Rural Health Services and $1.9 million in cuts to services for Seasonal Migratory Workers.
• Expanded Access to Primary Care Clinics funding reduced by $8.4 million.

Released Inmate Populations, New Burdens for Counties

In addition to the loss of funding for county mental health services, State prisons' rehabilitation programs are being reduced by 80 percent. As NAMI members know, a majority of California's prison population has symptoms of mental illness. Early release programs to reduce the budgets for state prisons means that inmates are unlikely to receive adequate health care once released, placing additional burdens on county mental health services. California inmates experience high rates of being uninsurable and unemployable and this reality, coupled with already high unemployment rates, will create greater barriers to levels of care.

As the recourses continue to drop, more and more people will be forced to receive care in the form of one-time treatment in hospital emergency rooms, greatly reducing the odds that they can stabilize, let alone recover. It becomes only more urgent today that NAMI California and other mental health associations and organizations throughout the state focus on how best to live within the narrow margins of our fiscal realities and still provide high quality services to consumers and families. While our NAMI Signature Programs are not a substitute for treatment, our programs provide a valuable resource to county mental health systems, especially when resources are hard to find. In some counties, partnerships between the county mental health department and NAMI Affiliates are a hopeful program alternative that stretches the mental health department dollar while helping NAMI Affiliates develop.

Link: www.namicalifornia.org