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HHSA warns of HR1 impacts, budgets Deer Creek behavioral health center and proposes targeted grants
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Summary
HHSA Director Ryan Groover said the agency enters the budget year with relatively strong reserves but warned HR1 (federal/state reconciliation) could cause Medi‑Cal disenrollments and new local costs. The budget includes $23M for Deer Creek Behavioral Health Center capital costs and a $200,000 one‑time grant to help community nonprofits facing funding cuts.
Ryan Groover, Director of the Health & Human Services Agency (HHSA), presented the agency’s comprehensive FY 2026–27 budget and highlighted several fiscal risks and priorities.
Financial position and major projects: Groover said HHSA is “in the strongest fiscal position that it’s ever been” and reported an agency‑level ending fund balance of roughly $67 million. The proposed budget budgets both revenue and expense for the Deer Creek Behavioral Health Center, a capital project with approximately $23 million of budgeted expense in 2026–27; HHSA said it expects construction costs to accelerate in late June/July. Behavioral health payment reform has increased Medi‑Cal revenue, and the county has reinvested those funds into system capacity.
HR1 and program risks: Groover highlighted federal/state reconciliation actions (HR1) as the largest emerging threat. Key near‑term impacts include: October changes restricting Medi‑Cal eligibility for some categories; administrative cost shares for CalFresh that add roughly $300,000 in FY 2026–27 and could rise toward $4 million depending on state decisions; and a January 2027 workload increase tied to 6‑month Medi‑Cal redeterminations and potential work requirements. HHSA stressed the priority of keeping people enrolled in Medi‑Cal to avoid cascading local costs (indigent care, emergency departments, homelessness).
Service and staffing priorities: HHSA proposed limited‑term positions to support Homekey and permanent supportive housing implementation and described plans to leverage medical administrative activities to diversify revenue. Groover said many HHSA programs are state/federally funded and that realignment revenue is economically driven, making reserves and planned transfers important for short‑term buffering.
Community grants and homelessness: HHSA proposed a one‑time, competitive $200,000 grant pool to help community‑based organizations that lost state/federal funds — targeted to health and human services needs and administered through existing community initiative structures. Groover also highlighted declines in the county’s point‑in‑time homeless count and investments that support that trend, but he said housing affordability remains the unifying cause of homelessness.
Next steps: HHSA requested board direction on a proposed realignment transfer ($400,000 from behavioral health to social services) to offset CalFresh administrative costs and to continue monitoring HR1 impacts. Groover said the agency will return with more detailed program budgets and will work with the budget subcommittee on contingent positions and fund‑balance use.
