Santa Cruz County staff outline major funding and reporting shifts under California27s Behavioral Health Services Act
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Summary
County health officials told supervisors the state27s Behavioral Health Services Act (Proposition 1 implementation) will shrink local allocations, create a 30% housing intervention set-aside, require new reporting and integrated plans, and redirect prevention funds to the state, forcing trade-offs for local services.
Santa Cruz County behavioral health officials on Feb. 10 briefed the Board of Supervisors on the state27s transition from the Mental Health Services Act (MHSA) to the Behavioral Health Services Act (BHSA), a change triggered by Proposition 1 (approved March 2024).
Director Connie Moreno Peraza and Behavioral Health Director Dr. Marni Sandoval told the board that BHSA will reduce counties27 share of the millionaire27s tax and reallocate funds to state-managed priorities. Key fiscal shifts include an increase in the state27s administrative share, elimination of locally controlled prevention and innovation allocations, a new prudent reserve cap reduction (from 33% to 20%), and a new stand-alone housing-intervention funding category that will consume about 30% of local BHSA allocations.
Sandoval said BHSA requires counties to use a portion of the millionaire27s tax for services to people with substance use disorders and to make new mandatory investments in housing supports for people with behavioral-health needs. The local portion available for clinical services and general supports will be "squeezed" by the new housing set-aside and other required categories, she said, and county leaders will confront trade-offs between preserving existing direct services and complying with new allowable uses.
BHSA also creates new statewide behavioral-health goals (increasing access to care, reducing untreated conditions, lowering institutionalization and homelessness, reducing justice involvement and child removal, and one county-selected additional goal). Counties must develop a three-year Behavioral Health Integrated Plan (BHIP) covering all behavioral-health funding sources, not just BHSA dollars; the draft BHIP is due to the state March 31, with a final plan expected by June 30.
Sandoval said the state will now oversee prevention funding, which will limit local prevention program options. Community-based organizations that used to receive local prevention grants will need technical assistance and support to apply for state prevention grants. She flagged workforce, provider monitoring and expanded community planning as major operational lifts for the county.
Board members pressed staff about how housing dollars can be used (capital, operating subsidies, landlord mitigation, and board-and-care rates are allowable in specified settings) and how counties can coordinate BHSA housing interventions with Medi-Cal managed-care plans and other sources. Staff said counties may transfer up to 7% between categories (14% cumulatively) with state approval.
Quote: "This is not new money," Sandoval said. "It is a reduction in allocations and a major shift in what we can fund." She urged the board to prepare for difficult choices in the coming budget cycle.
Outcome: The board voted 5-0 to accept the staff presentation, continue community planning and return with required documents on the timeline outlined by staff.