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Yolo County faces $4 million structural MHSA shortfall as BHSA rules shift funding toward housing
Summary
County staff told the Board of Supervisors on Sept. 9 that the Mental Health Services Act budget faces an estimated $4 million structural deficit for fiscal 2025-26 and warned of further shortfalls as California moves funding under the Behavioral Health Services Act toward housing and treatment mandates.
Yolo County officials told the Board of Supervisors on Sept. 9 that changes tied to California's transition from the Mental Health Services Act to the Behavioral Health Services Act and new state direction under Proposition 1 will leave the county with a structural shortfall in MHSA-funded programs.
Tamoni Camarales, interim behavioral health director, and other Health and Human Services Agency staff said the county arrived at an estimated structural deficit of about $4 million for fiscal 2025-26 after in-house reorganizations and other adjustments cut an earlier $11.4 million gap. Staff cautioned the shortfall could grow by roughly another $5 million in 2026-27 after state-required shifts that direct about 30% of local MHSA revenue to housing interventions under BHSA.
Health agency staff described what they called three example scenarios to reduce spending: (1) internal program cuts that would scale back county-run prevention and outreach work, (2) reductions to external MHSA contracts with nonprofit and hospital partners, and (3) a combined approach. Staff said full mitigation would require action akin to scenario 3 and stressed they would not exhaust all fund balances without board direction. Among actions already taken earlier this year, staff said the county brought a roughly $5.6 million Hope Cooperative full-service partnership contract in-house and reassigned staff to preserve services while retaining Medi-Cal revenue.
Staff warned the county must comply with new BHSA priorities that emphasize treatment for Medi-Cal beneficiaries, maximize Medi-Cal reimbursement, and dedicate 30% of funds to housing interventions. Under the state guidance described by staff, housing investments must prioritize chronically homeless individuals and full-service-partnership clients. The state has also moved workforce and prevention functions into separate state-administered pots of funding, staff said.
Board members and more than a dozen public commenters pressed for more data before any cuts are finalized and urged longer runways for school-based mental-health partnerships and community programs. Speakers included representatives of the National Alliance on Mental Illness Yolo (NAMI), Help Me Grow Yolo, CommuniCare and school-district leaders, who said cutting the K-12 partnership or Help Me Grow would disrupt services while schools and nonprofits build Medi-Cal billing capacity.
Staff proposed a timeline that would bring a proposed budget resolution and final guidance to the board in October, begin a 30-day public-comment period on the annual plan in November, and transmit a final county BHSA plan to the state by March 31, 2026. County staff said they would return Sept. 23 for initial direction and again Oct. 7 with a draft budget resolution for board consideration.
