Senate Finance reviews substitute for SB3, large appropriations in SB2 and amendment to SB1 to create regional behavioral health system

Adrian Avila, committee staff, walked the Senate Finance Committee through a three-bill package that would reshape regional behavioral health planning and fund statewide expansions.

"This bill is now 15 pages compared to its original bill that was around 9," Avila said of the Senate Finance Committee substitute for Senate Bill 3, explaining why the measure is being offered as a substitute rather than an amendment.

The package ties three principal elements together: (1) SB3, a “guardrails” bill that sets regional planning processes and standards; (2) SB2, an appropriation bill that would provide roughly $200 million for implementation and workforce; and (3) an amendment to SB1 that would remove a proposed $1 billion transfer and instead allow the newly created trust to act as a reserve for fiscal years 2026–27.

Why it matters: The bills aim to move behavioral health service design and early implementation to a regional level while keeping Medicaid integrity and statewide oversight. Avila described several new or expanded provisions in SB3: the Administrative Office of the Courts (AOC) would convene regional stakeholders and help develop regional plans; the Health Care Authority (HCA) would set service standards, be the single Medicaid authority, and verify that regional plans do not jeopardize the state Medicaid program; and the Legislative Finance Committee (LFC) and HCA would perform gap analyses and audits. Avila said the substitute: "adds a new definition for disproportionately impacted communities" and requires regions to include phased implementation, timelines, performance measures and a sustainability plan.

Key program and funding details described by Avila include: - SB2 total price tag described as $200,000,000; specific appropriations cited in the presentation included $3,000,000 to HCA to support 988/911 coordination, $9,000,000 for patient navigation, $15,000,000 over three years for youth behavioral health services administered by the Department of Health, $2,000,000 for Project ECHO, and an annual $10,000,000 to HCA for regional certified peer support workers, justice liaisons and regional HCA staff to implement audits and regional operations. - A mobile crisis split: about $6,000,000 for local components and $5,500,000 for state agencies and DPS to staff crisis response vehicles (Avila noted a numeric typo in the draft to be corrected). - A reversion date in SB2 of 2029 so unspent funds revert to the newly created behavioral health trust fund in SB1.

Several operational changes are written into SB3, as Avila described them: regions must update their plans after sequential intercept mapping (SIM) is completed but may access funds before SIM is finished; grant funds may be repurposed within a region if grantees fail to report or meet performance standards; HCA and the LFC will require baseline data points and periodic reporting beginning in 2027; and HCA must perform statewide gap analyses every two fiscal years. Avila also described workforce provisions: higher education institutions in regions would be asked to coordinate with HCA and workforce partners to develop behavioral health pipelines, including pathways for people with lived experience.

Committee members pressed for implementation clarity and accountability. Senator Padilla and others repeatedly asked who "owns" the end-to-end project and whether a project management office or a small executive oversight group should be created to monitor progress, prevent duplication, and address slippage. Avila and other witnesses explained the statute establishes a bifurcated responsibility: the AOC is the convener and responsible for regional planning, and the HCA is responsible for service standards, Medicaid coordination and audits. Avila said regional planning "is gonna be on the courts," while "the health care authority remains the single entity" for standards. The AOC representative told the committee the courts did not request this role but "are happy to accept" legislative direction and will build needed capacity.

On enforcement and oversight, the substitute adds an audit and evaluation section requiring the HCA to monitor grantees and the LFC to conduct evaluations (contracting out if needed). Avila said the LFC will provide "ongoing real time review of project progress and deliverables" and will identify design or implementation flaws so regions can pivot.

Committee members asked about HIPAA and data-sharing. Avila and the HCA representative said federal privacy law still governs clinical records and some patient-level data will be redacted; financial and expenditure data can move faster. Avila emphasized that reports beginning in 2027 will include a list of qualified and certified providers in each region.

Implementation timeline and early reporting: The substitute requires the AOC to provide monthly updates on sequential intercept mapping and regional planning from May 1, 2025 through Dec. 31, 2025, then quarterly updates beginning Jan. 1, 2026, giving the Legislature and HCA regular status checks during the initial rollout. Avila said the courts and HCA may use existing convening support from regional associations and councils of governments to assemble stakeholders.

Unresolved policy choices discussed: several senators asked the committees to add explicit statutory language to create a project management office or an executive-level coordinating body to ensure cross-agency integration and day-to-day accountability. Multiple senators recommended building reporting benchmarks and requiring periodic performance reports to the LFC. Avila said committee staff would draft language to incorporate a management structure in the next substitute amendment (the presenter referred to work toward a ".4" drafting iteration and scheduling for the committee). Senator Padilla and others asked that any management office be funded.

Ending: Committee members and agency witnesses agreed the approach would proceed to additional drafting; Avila said the staff would prepare an updated committee substitute and that AOC and HCA would begin preparatory work. No formal committee vote was recorded during this hearing portion on the substitute bills.

Votes at a glance: No motions or roll-call votes on SB2, SB3, or the SB1 amendment were recorded in the transcript.