Assembly hearing spotlights Proposition 1 rollout, BCHIP awards and county planning challenges

The California State Assembly Health Committee held an informational hearing March 4 to review implementation milestones and challenges for Proposition 1, the Behavioral Health Services Act (BHSA) and the Behavioral Health Continuum Infrastructure Program (BCHIP).

The hearing highlighted large statewide investments and lingering gaps: Proposition 1 amended the Mental Health Services Act and authorized a $6.4 billion bond, state and legislative analysts said, supplementing about $1.7 billion already awarded through BCHIP and adding $4.4 billion in bond funds to the program. "Given the well documented shortage of facilities, the BCHIP program is building much needed behavioral health infrastructure in the state," Ryan Miller of the Legislative Analyst's Office said.

Why it matters: Proposition 1 changes how counties may use the millionaire's tax (a 1% levy on incomes above $1 million), requires broader reporting and adds new state-level shares and programs. Committee members and county officials warned that while the bond and program funds can create beds, clinics and housing, counties will need workforce, planning capacity and time to translate awards into operating services.

Major fiscal changes and timelines - Proposition 1 recasts the Mental Health Services Act (MHSA) as the Behavioral Health Services Act (BHSA). The state share of the millionaire's tax rose from 5% to 10%; up to 4% is directed to the Department of Public Health for population-based prevention, up to 3% to the Health Care Access and Information (HCAI) entity for workforce initiatives, and the remaining 3% for state administration, presenters said. Counties retain roughly 90% of the tax revenue but under revised buckets that include a new housing interventions category. - BCHIP awards to date total about $1.7 billion; combined with the Proposition 1 bond the program will exceed $6 billion in facility funding. DHCS said it aims to announce roughly three-quarters of bond awards by May 2025 and complete awards by 2026. Counties must prepare integrated three‑year plans now through June 2026 and the new funding categories take effect July 2026. Counties will submit their first annual expenditure reports in January 2029.

What speakers told the committee - LAO overview: Will Owens and Ryan Miller described changes in funding buckets and reporting requirements, noting that counties will now report on all behavioral health expenditures, not just millionaire's-tax spending, and that full-service partnerships and a new housing category are central under BHSA. - LAO assessment of BCHIP: Miller summarized the LAO review of BCHIP rounds 2022–2023 and flagged targeting issues. The LAO found many BCHIP projects would serve high shares of Medi‑Cal enrollees and that launch‑ready scoring favored applicants with preexisting capacity. The office also identified regions that appeared under- or over-represented in awards, and said "no awards were made in the region that had the highest need," naming the Southern San Joaquin Valley in its analysis. - County perspective: Susan Holt, director of Fresno County Behavioral Health, described use of RAND's 2022 inpatient‑bed study to guide applications and said her county submitted nine BCHIP proposals totaling about $104.7 million but received no final BCHIP awards after a tentative award could not be accepted because of unforeseen site problems and escalating renovation costs. "The public behavioral health system truly is that it's a public system," Holt told the committee, and she urged prioritizing hard‑to‑place populations, substance use disorder capacity, and licensing/siting support. - State program oversight and rollout: Marlyce Perez of the Department of Health Care Services (DHCS) said rounds 3–5 funded 223 mental‑health and/or substance‑use‑disorder facilities to date, and that BCHIP also expanded mobile crisis teams; DHCS reported more than 400 mobile crisis teams were created with earlier funding. Perez described steps DHCS has taken to adjust scoring, add discretionary funds for regions and tribes, provide technical assistance to small counties, and shorten contract execution timelines for bond awards.

Challenges and concerns highlighted - Geographic targeting and equity: The LAO recommended revisiting the regional funding model and cautioned that allocating by historical service patterns can perpetuate disparities. Several committee members and stakeholders echoed that concern and asked how the remaining BCHIP bond rounds can be directed to regions with the highest unmet need. - Small counties and administrative barriers: LAO and DHCS both noted that many small counties either did not apply or did not receive awards in main BCHIP rounds; DHCS said 16 of 18 small counties that did not receive funding had not applied and that technical assistance and planning grants have helped some. Multiple public commenters and provider representatives stressed that application costs (legal, construction, consultants) are high and that up-front or interim payments would reduce financial strain on smaller nonprofit providers. - Workforce and operating dollars: County and provider witnesses said bricks‑and‑mortar funding must be matched by service funding and staffing to operate new beds and programs. Susan Holt and provider groups warned that facilities without sustainable staffing and service dollars will not expand access. DHCS and state officials said workforce initiatives are funded at the state level under the BHSA (the 3% workforce set‑aside) and under separate workforce investments such as BH Connect. - Data, accountability and reporting: The committee heard that county behavioral health data systems are fragmented and outdated. DHCS described a multi‑module, digital policy manual, a new county portal for integrated plans, and a Behavioral Health Outcomes and Accountability Transparency Report ("BOATER") that will begin with a draft in January 2028 and an initial final report in January 2029. Several advocacy groups urged robust outcome measures and equity audits.

No formal votes or policy changes were made at the hearing; the session was informational.

Looking forward Committee members and witnesses repeatedly urged continued technical assistance, clearer coordination between DHCS and housing partners (HCD) for the housing set‑aside, and ongoing oversight to ensure awards translate into operating services and improved access. DHCS said it will announce bond conditional awards in May 2025 and release a second BCHIP bond request for applications in spring 2026.

Ending note Speakers framed the rollout as both an historic opportunity and a test of implementation: large one‑time investments paired with new ongoing spending rules for counties, new reporting expectations and a need for workforce and operating support. As one county director put it, the funds create an opening "to build out brick and mortar infrastructure capacity," but care and staffing must follow the buildings to expand access and outcomes for Californians.