Debate over naloxone funding: subcommittee hears advocates warn cuts to harm‑reduction programs

The Assembly Subcommittee 1 on Health spent a substantial portion of its family health update hearing on the state's opioid settlement fund and a proposed Naloxone distribution project.

Department of Finance staff told the committee that updated opioid settlement fund revenue estimates led the administration to reprioritize some OSF expenditures and propose $8.3 million in opioid settlement funding in 2025‑26 for a statewide Naloxone distribution project administered by DHCS. Department of Finance staff and DHCS said the governor's budget maintains other OSF spending in the current year and includes targeted funding for Naloxone distribution in the budget year; they also noted that the state receives separate OSF payments that go directly to cities and counties.

Several witnesses and program operators told the committee those characterizations understate the on‑the‑ground dependence of syringe access and community harm‑reduction programs on COFRE/OSF dollars. Speakers from community programs and statewide organizations said local syringe service programs and harm‑reduction organizations use OSF/COFRE funds not only to purchase naloxone but also to hire outreach workers, deliver naloxone in the field, provide HIV/hepatitis C testing, and offer treatment navigation. They said those services have prevented deaths and reduced emergency care use; several provided personal testimony of lives saved.

Advocates pressed the subcommittee to restore $8.4 million that Department of Finance proposes to allocate to the Naloxone distribution project, arguing that withdrawing COFRE support jeopardizes a broader package of harm‑reduction services and technical assistance—services that community groups said account for most overdose reversals in state data.

Department of Finance and DHCS staff responded that much OSF funding does flow to local governments and that a majority of counties’ OSF uses are directed to harm reduction. They said the administration prioritized Naloxone distribution in recognition of fentanyl‑driven overdose risk and because many local jurisdictions purchase naloxone directly. DOJ‑supplied payment schedules and recent bankruptcies among opioid manufacturers (Endo, Mallinckrodt referenced in testimony) have reduced expected OSF receipts and created uncertainty; DOF testified state receipts are now projected at roughly $750 million in total for state‑directed purposes through 2039, per the November 2024 DOJ schedule, and that some recent settlement payments were front‑loaded or prepaid.

Legislators and advocates sought more transparency on the OSF revenue schedule, the effect of bankruptcies on receipts, and how much of county OSF allocations are actually spent on frontline harm‑reduction programs versus naloxone procurement. Several members asked DHCS and DOF to provide more detailed, federally sourced payment schedules and to explore bridge funding or alternative state funding sources if OSF revenues will not meet current program commitments.

The committee heard many public comments from harm‑reduction programs describing how COFRE funding supports staffing, outreach, and distribution networks; several speakers warned that shifting money away from syringe programs toward a single statewide naloxone purchase program would harm the community‑level services that distribute naloxone, sustain trust with people who use drugs, and provide ancillary services that reduce overdose risk.