Senate hearing: Prop 36 implementation faces major funding shortfalls as counties, courts and treatment providers seek tens of millions

SACRAMENTO — State and local officials told a joint informational hearing of California Senate Budget Subcommittee No. 5 and the Senate Public Safety Committee that Proposition 36 implementation is underway but faces serious funding and capacity shortfalls that threaten the law’s promise of treatment over incarceration.

"As the governor announced yesterday, we have a $12,000,000,000 budget problem to solve," Sen. Susan Richardson, co-chair of the joint hearing, said in opening remarks. "We are facing potentially devastating cuts primarily in health care." Richardson urged lawmakers to weigh Prop 36 needs as they negotiate the state budget.

The hearing focused on the fiscal interaction between Prop 36 (the recent voter initiative creating a treatment-mandated felony pathway) and Proposition 47 (the 2014 measure whose prison-savings fund — often called the Second Chance Fund — supplies competitive grants). Justin Adelman, assistant program budget manager at the Department of Finance, said "the May revision includes $88,500,000 for Proposition 36," split between projected state prison costs and grant funding for treatment and diversion programs. Adelman said roughly $29,300,000 is budgeted for marginal prison costs in 2025–26 and about $49,200,000 is the Department of Finance’s estimate of the 65% share that flows to the Board of State and Community Corrections (BSCC) from Proposition 47 savings.

But multiple witnesses warned that the pool of Prop 47 savings available for grants will decline as Prop 36 increases state prison costs. Adelman and other presenters said BSCC grant availability could fall to roughly $17,400,000 by 2027–28 unless other funding sources are provided.

The Board of State and Community Corrections has moved to release a fifth grant cohort to…