The Yolo County Board of Supervisors on Aug. 21 approved an interim budget approach to address a roughly $4 million structural shortfall in Mental Health Services Act (MHSA) funding for fiscal year 2025'26 while the state transitions to the Behavioral Health Services Act (BHSA).

Staff presented three scenarios and recommended a hybrid approach that reduces county-run behavioral-health programming by $2,638,000, reduces MHSA contract funding to community-based organizations by $695,000 (a roughly 25% cut to those contracts), uses about $869,000 from MHSA fund balance and applies $146,000 from cannabis and board-directed funds. The board voted to adopt that recommendation for 2025'26 and directed staff to return with more details for FY 2026'27 and the BHSA plan.

Why it matters: California enacted both a ballot measure and implementing statutes that reshape how counties will use formerly MHSA-controlled dollars. The BHSA requires that approximately 30% of funds be dedicated to housing interventions and calls for a larger share of resources to be concentrated on people with the most severe behavioral-health needs; counties must also expand Medi-Cal billing capacity for providers. Yolo County staff warned that the changes, combined with revenue projections, create an immediate funding gap that must be managed while planning for a statutory shift in priorities.

What the board acted on: County behavioral-health leadership had identified a current-year structural deficit near $4 million and a projected $5 million gap next fiscal year. The agency presented a list of internal reductions and contract changes that were modeled into three scenarios. The board approved the middle option that uses a mix of provider cuts, county program reductions and limited one-time fund-balance support to spread impacts and give community partners a runway to pursue Medi-Cal billing and other revenue options.

Staff noted several factors that reduced the previously estimated deficit: bringing a prior contracted Full-Service Partnership (FSP) arrangement in-house removed roughly $5.9 million in contract payments while adding about $1.1 million in salary and benefit costs; adjustments to Medi-Cal and other revenue estimates reduced projected costs; and changes to crisis and inpatient contract spending produced additional savings.

Community reaction and board direction: Dozens of written and spoken public comments urged the board to protect school-based services and community providers, noting the scale of current mental-health needs among students and families. School district and provider officials described programs that place clinicians and case managers on campus and said cuts would harm access in rural communities. NAMI Yolo and other advocacy groups urged a more cautious approach.

In voting, the board accepted staff'recommended reductions for the current fiscal year, with the explicit direction that staff return with refined analyses, options to maximize Medi-Cal billing, and more detailed cost and service-impact information before finalizing FY 2026'27 decisions and the county's BHSA plan. The board also instructed staff to preserve transparency and to work closely with school districts and community partners on any contract adjustments.

What comes next: Staff will continue community planning required for BHSA and expects to submit a BHSA plan to the state in March. The county will pursue improved Medi-Cal billing infrastructure and other revenue opportunities, and will work with providers on transition steps and short-term buffers. The board asked staff to return with: a) more granular data on contract-level service volumes and staffing, b) an explicit plan for increasing Medi-Cal reimbursement capacity (including EHR and billing changes), and c) options for service delivery configurations to preserve geographic access (for example, hours or mobile offerings for drop-in sites).