As An Overhaul Of California’s Mental Health Spending Gets Shelved, One Mother Pushes For Reform

Correction: An earlier version of this story incorrectly calculated the excess amounts in counties’ rainy day funds as of June 30, 2019. This analysis has been removed from the story. We are redoing it with the correct calculations, and will update this story with that information once it is available.

Walking down a stark grey hallway in the Rio Cosumnes Correctional Center in February, Lisa pauses at a window to look at the gated courtyard below. She wonders how often her son is allowed to go outside.

Her son is in his 30s, and facing felony charges. But he’s been deemed incompetent to stand trial due to his paranoid schizophrenia. 

As he waits behind bars, Lisa finds herself wondering what she could have done for him. (We’re using only Lisa’s first name for this story, to protect her son’s identity.) The Sacramento retiree says she tried for years to get him treatment, but he refused. As time went on, she says he became more and more difficult to live with. Last fall, she drew the line and had him arrested after he stole her car. 

Now, improvements to state programs that might have helped Lisa’s son and people like him are on hold.

Before the COVID-19 pandemic sunk California into a $54 billion deficit and led Gov. Gavin Newsom to shrink his budget, he had plans to overhaul the Mental Health Services Act. 

But those plans were deferred in this week’s finalized budget, leaving advocates wondering when they’ll see a fix to what some describe as a broken system. 

The 2004 law, also known as Proposition 63, was authored by then-Assemblyman and current Sacramento Mayor Darrell Steinberg. It wages a 1% tax on Californians with incomes greater than $1 million, and today generates more than $2 billion a year, which is then distributed to counties to prevent and treat mental illness. 

The act was originally intended as a replacement for psychiatric institutions, to help the state’s most severely impaired function in their communities.

But many advocates and family members feel the money is being spent for other purposes, and a CapRadio data investigation shows many counties aren’t complying with state rules about how to use the funds.

It’s a question that’s been on Lisa’s mind for the last few years, as her son’s ability to function declined at a steady clip.

“I just want to know how people like my son can get help easier than having to go to jail,” she said. “Why can’t there be some other kind of intervention? Why do we have to fight so hard?"

Billions Of Dollars Unspent

When lawmakers created the Mental Health Services Act, they wrote rules about how counties should spend the monthly allocations they get from the state. Those dollar amounts vary heavily depending on county population and needs, but all counties are required to track their spending by category and report it back to the Department of Health Care Services.

The majority of the funding — 76% —  is supposed to go toward “community services and supports,” broadly defined as outpatient services for people with severe mental illness. That might mean a clinic, a support group or a daytime recovery center. Within this category, there are pots of money set aside for expanding the mental health workforce, getting community members involved in planning and improving buildings and other infrastructure. 

Another 19% is designated for “prevention and early intervention,” which often involves community education, public stigma reduction campaigns and phone lines where people experiencing non-urgent distress can talk to people with lived experience.

The remaining 5% of the allocation must go toward “innovation” programs that have never been done before.

But enforcement of the requirements has been minimal, according to a 2018 report from the California State Auditor. It found that the Department of Health Care Services, which oversees the Act, isn’t making sure counties file annual reports on how they use the funds, or auditing programs or spending. 

Auditors also called DHCS out for allowing local mental health agencies to amass $2.5 billion in unspent funds by 2016. These unspent funds include money that goes into a sort of rainy day account, which allows counties to set aside money so that they can continue to provide mental health services during an economic downturn such as the one happening now. 

There is a cap on how much money counties are allowed to leave unspent in that reserve, and counties have faced increasing pressure from the state to transfer and use unspent funds over this limit. 

The state originally told counties that they had until June 30, 2020 to transfer the extra money into funds for program spending that’s designated under Prop. 63 or risk the state taking the money back.

In light of the pandemic, a coalition of mental health organizations urged the state to extend that June 30 deadline so that counties could figure out how to put the money toward mental health treatment related to COVID-19. The state has given counties until July 1, 2021 to use the funds.

Ahead of that 2021 reversion, it’s not yet possible to report the amount of excess funds that were in counties’ prudent reserves at the end of the 2019-20 fiscal year as the deadline for counties to submit their annual reports for this fiscal year to the Department of Health Care Services is not until December.

‘Nothing You Can Do’

Lisa knows about these unspent funds. At her support group with other parents of schizophrenic children, she tries to stay up-to-date. But she finds the concept of a rainy day reserve frustrating. 

“When we have people who are homeless and with serious mental illness not getting the care they need … how can you be allowed to hold that much money? I don’t get it,” she said.

Lisa spent most of her career as a pediatric nurse practitioner, so she could tell early on that her eldest son’s behavior was something to keep an eye on.

“My son was a very difficult person to bring up,” she said. 

She recalls his stubborn attitude, and at times brazen defiance over routine things like teeth-brushing and doing his laundry.

But it wasn’t until his late teen years, after he’d moved to Los Angeles, that his psychosis began to show. 

Lisa says he alternated between listlessness, paranoia and delusion. “He thought people were talking about him,” she said. “I would get this through phone conversations. He’d think of things like ‘There’s antennas in my teeth and they’re telling me things to do.’ 

“I knew then there was something wrong.”

When he returned home, she says he stayed in treatment and remained stable for about three years. But she says when he started refusing to take his medications, their life spiraled into a series of power struggles.

“He wanted more and more money and I couldn’t give it to him,” she said. “Then he started emptying out my refrigerator, all the food. If I tried to get away, he’d sit on my car so I couldn’t leave. I had to put locks on my bedroom door, my computer room where I keep all my papers, my finances, because he was going through those.”

Lisa’s younger son corroborated many of the following details.

She says her older son never acknowledged he was sick. Several times, she called the police so they could admit him to the emergency room under a 5150 hold, which allows authorities to restrain someone if they’re a threat to themselves or others. 

It got to a point where she couldn’t keep him at home anymore, she said. 

He started living on the streets of their neighborhood. She brought him lunch and cash, and resisted the urge to take him in.

As she was helping him pick out a pair of shoes last October, she says he grabbed her car keys and drove off with her purse. She decided not to let it slide.

“[The officers] said, ‘Do you want to press charges?’ And I said ‘Absolutely,’” she recalled. “It’s the only way. If they’re not willing to go for help, there’s nothing you can do.”

‘What Are We Doing Wrong?’

The problem of counties not spending their Prop. 63 money dates back to the act’s early implementation. A 2008 audit from the Department of Finance called out “major weaknesses” in the development of MHSA-compliant spending plans, as well as the state’s funding-distribution process. And in 2015, the Little Hoover Commission, an independent oversight agency, wrote that “the state still cannot definitively quantify who has been helped by Proposition 63 spending and how.” 

In December 2019, the Assembly Budget Committee held a hearing on the act. The briefing they prepared for the event posed the question, “What are we doing wrong?”

Susan Gallagher directs Cal Voices, a nonprofit run by mentally ill individuals and their loved ones that has been pushing for better implementation of the MHSA for more than a decade. She says some of the problems are tied to county leadership.

“It looks like the counties used it as just another funding stream,” she said. 

Her organization has criticized counties for putting the money toward programs designed for people with mild mental illness, such as anti-stigma campaigns, yoga and wellness apps. 

“It’s been a little bit of a dog-and-pony show,” Gallagher said. 

In an emailed statement, a Department of Health Care Services spokesperson wrote that it’s “committed to working with its partners and stakeholders to meet the behavioral health needs of Californians,” including considering changes to spending rules during the pandemic.

The interventions that advocates feel are the most effective — housing units with built-in treatment, peer-run wellness centers, outpatient programs with casework — are also the hardest to execute. These programs usually fall under the category of “full-service partnerships,” and counties are supposed to spend at least 51 percent of their community services and support dollars on them. 

CapRadio’s spending analysis found that 29 of the counties that submitted their 2018-19 spending reports were not using 51% of their program spending on these full-service partnership programs, though a handful were close to that mark.

Of Sacramento County’s community services and support program spending in 2018-19, only 43% went to full service partnership programs. While this doesn’t include how administration funding is split up, looking at counties’ program spending is a good ballpark figure for how their dollars are being allocated, according to the Mental Health Services Oversight and Accountability Commission’s Brian Sala. 

The commission tracks some of these metrics, but it only includes spending through 2017. It also lacks any data on outcomes for patients receiving MHSA-funded services.

Executive director Toby Ewing says there’s a major effort underway to update the numbers, and to provide data on how many MHSA recipients go on to avoid incarceration, stay employed or find housing.

“I would argue that there’s more transparency in mental health than probably most public programs in California, but we also can do better,” he said. 

He feels similarly about the way the dollars are spent. 

“The MHSA says prevent unemployment, and it also says prevent homelessness,” he said. “If we’re going to be successful here, we don’t want to wait until someone has progressed so far down an illness that they’re on the street or in jail or in a state hospital. We want to move way upstream.”

Ewing also pointed out that many of the counties that are missing the mark are very small counties that may struggle to implement more difficult programs. He said that this discrepancy may suggest that the rule should be changed for these counties.

Sacramento Mayor Darrell Steinberg says that even if the Prop. 63 overhaul must be delayed so that California can cope with COVID-19, there’s still a crucial need to take a closer look at the Act.

“Prop. 63 was intended to build a more robust system of care — and even with some of the challenges, and even some of the audits, it has delivered on its promise,” he said. “But it hasn’t been enough, and it hasn’t been focused enough.”

A Request For Flexibility

In May, 21 California mental health organizations wrote a letter to lawmakers and health department heads about the need to change the Mental Health Services Act to address the COVID-19 crisis.

Among their requests:

• Make it easier for counties to spend the money in their reserves. Currently, it can only be used if the totals in the prevention and community services accounts are below a certain threshold.

• Extend the June 30 deadline for counties to use their unspent funds. The coalition says many counties planned to use that money on in-person programs that are no longer feasible due to COVID-19. Since the letter was sent, the state has bumped that deadline to July 2021.

• Allow counties to break the rules about the spending categories (76% community services, 19% prevention, 5% innovation).

Organizations behind the letter say the Prop. 63 funds could be crucial during this time, if the current restrictions on the funding are loosened. For example, the act limits how much money counties can take from the community services pot for training and hiring workers or building and improving treatment centers, which advocates wrote could be “vital in addressing community needs during the pandemic.”

Gallagher, with Cal Voices, said the authors never received a response. The Department of Health Care Services says it is “reviewing the requests” in the letter and “looks forward to engaging stakeholders in the future.”

Steinberg also has ideas on how MHSA money, particularly the unspent funds, could be used.

“For example it took several million dollars to be able to double the capacity of our suicide prevention hotlines or our mental health warm lines. … We could take some of it and we could invest in some smart ways to address the urgent need in the moment,” he said.

Ewing says it’s important to grant counties flexibility right now, especially because many of the spending plans they created before the pandemic could be impossible to implement, such as school-based mental health services. 

“The fiscal incentive to get the money out can lead to spending decisions that aren’t necessarily in the best interest of a changing environment,” he said.

Gallagher says there’s a lack of calm, supervised places for people to go when they’re experiencing a mental health crisis. 

“Where do people in severe crisis go?” she said. “If someone is suicidal, I don’t think urgent care is a great place for them. To me, the best place is somewhere they can go to directly, not go through another loop and another loop.”

During the COVID-19 pandemic, many counties have been focused on moving homeless individuals into motel rooms to reduce their chances of catching and spreading the virus on the streets. Steinberg points out that many of the individuals moving indoors are mentally ill, and counties could be using their Prop. 63 dollars to provide behavioral health support.

Lisa says she understands the need to funnel resources toward COVID-19, but she’s disappointed the governor tabled discussions about transforming the Mental Health Services Act.

“The fact that we can get trailers like that, change Cal Expo into a hospital, get all these hotel rooms — why can’t we do that without a virus?” she said. “Why can’t we create these places for the homeless and mentally ill so they can get treatment?”

‘The Only Way’

Before correctional facilities banned visitors due to COVID-19, Lisa went to see her son in the Elk Grove jail as often as she could, and tried to get information on his treatment plan. She says he would sometimes beg her to drop the charges against him. 

“He’s asked me a few times,” she said. “But I tell him ‘I can’t do that. I’m trying to get you help, and this is the only way I can do it. And I’m really sorry.’

She said when she gets really upset about his situation, she reminds herself that her son is fed, housed and relatively safe.

“I don’t like seeing him in jail, but I can’t stand the thought of him having the winter outside and being homeless. He is gonna get help. When? I don’t know.”

She remains hopeful the state will move to help families like hers, even if the Prop. 63 overhaul doesn’t happen this year. 

“He needs supportive services, he needs somebody there, and it can’t be me anymore,” she said. “After this I don’t think there’s much more I can do, other than love him any way that he is. But the one thing you can’t stop, is you can’t stop hoping."