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Yolo County officials warn of $11 million MHSA shortfall as state shifts to Behavioral Health Services Act
Summary
County health and behavioral‑health officials told supervisors the Mental Health Services Act budget faces a structural shortfall of about $11 million this fiscal year; transition to the Behavioral Health Services Act will change formulae and could magnify the gap unless programs are pared or Medi‑Cal billing increases.
Yolo County Health and Human Services and behavioral health leaders told the Board of Supervisors June 3 that the county faces a multi‑million dollar structural deficit in Mental Health Services Act (MHSA) funding and must plan spending reductions and billing expansions ahead of the state’s shift to the Behavioral Health Services Act (BHSA) on July 1, 2026.
"We are anticipating $26,000,000 in MHSA expenditures with $15,000,000 in revenues, leaving a structural deficit of $11,000,000," interim HHSA Director Joan Panal told the board during a detailed budget briefing. Tony Keller, interim behavioral health director, said that under BHSA the funding formula will change and the state will take an additional percentage off the top, with new minimum set‑asides for full‑service partnerships and housing interventions—factors that could increase funding pressure.
Officials laid out three broad approaches: maintain current service levels and deplete fund balances to cover the gap; implement selective reductions to preserve some fund balance; or cut expenditures to match the smaller BHSA allocation (estimated at roughly $10 million under some scenarios). Keller said translating the county’s existing MHSA program mix to BHSA categories would be complicated and could still leave a budget gap even if some programs qualify under the housing interventions set‑aside.
Board members pressed staff on timing and the need for transparency. Supervisors asked for a prioritized list of reductions and early action to preserve fund balance ahead of the budget adoption process. Panal and Keller proposed four strategic principles for local planning: fund statutory, core mental‑health services first; prioritize services for Medi‑Cal recipients where required by contract; maximize Medi‑Cal reimbursement through billing improvements; and reduce discretionary spending where necessary.
Supervisors and staff discussed a range of operational steps, including tightening program scopes, pursuing managed‑care billing (including community health worker and enhanced care management categories) and seeking targeted transitions over the next 6–12 months. Staff said they plan a public comment period and community engagement as they prepare the county’s MHSA update and the BHSA plan the state will require next year. No binding budget cuts were approved June 3; staff asked for direction to proceed with planning and analysis ahead of the county’s adopted budget.
