Up to 5 Percent of Revenue Available for State Purposes. Ideally, these ongoing services would be funded with a relatively stable revenue source that allows for consistent spending over time. The bulk of MHSA spending-for FSPs, other CSS, or prevention and early intervention activities-is intended to support community mental health services provided on an ongoing basis to the population eligible to receive them. These one-time or temporary activities, however, make up a small portion of overall county MHSA spending. In addition, certain activities-for example, some innovative programs-may be good candidates for pilot projects. Examples of these activities include constructing capital facilities, improving technology, and building prudent reserves. Some activities eligible for MHSA funding serve a one-time or temporary purpose. The remaining 5 percent must be spent on innovative programs.Ĭounty Programs Predominantly Serve Ongoing Needs. Nineteen percent must be used on prevention and early intervention activities, which are aimed at preventing mental illnesses before they become severe. The MHSA also allows counties to dedicate up to about 20 percent of the funding they receive under the CSS category to purposes that support their local mental health system, such as capital facility and technological needs, workforce development programs, and prudent reserves. At least 50 percent of CSS funding is directed by state rules towards FSPs, which provide mental health and wraparound services for individuals with the greatest mental health needs.
The CSS category has three service categories: full-service partnerships (FSP), outreach and engagement services, and general system development. CSS is the primary MSHA funding category that supports direct service provision to adults with serious mental illness and children and youth with serious emotional disturbance. Seventy-six percent of MHSA funding for counties must be used on community services and supports (CSS). The MHSA establishes a variety of parameters for how MHSA funding may be spent, including the percent of funds which must-or sometimes may-be spent on specific kinds of activities. The vast majority of MHSA funding goes to counties. Nearly All Revenue Dedicated to County Programs. Of Proposition 63 taxpayers, however, about 70 percent of the total tax liability in 2020 was concentrated among about 13,000 filers with taxable income of $5 million and over. These filers comprised about six-tenths of 1 percent of all PIT filers in 2020. In 2020, about 109,000 tax filers contributed $2.8 billion in revenue to MHSA. The tax is concentrated on a very small number of taxpayers.
The revenues from the MHSA tax are deposited into the Mental Health Services Fund (MHSF). Proposition 63 levied a 1 percent tax surcharge on taxable income over $1 million. In particular, the MHSA dedicates a share of funding to prevention and early intervention activities, as well as innovative programs, that at the time some had argued should be a greater focus of public community mental health services.įunds Services With Tax on Income Over $1 Million. The MHSA made substantial new funding available to counties for community mental health services. In November 2004, California voters approved Proposition 63, also known as the MHSA. Under this option, revenues could continue to be deposited into the MHSA fund in order to be dedicated to MHSA purposes, and the swap could be designed to raise the same amount of revenue over the long term. For example, swapping the MHSA tax for a portion of the overall personal income tax (PIT) would provide counties with a far more reliable revenue stream that would continue to exhibit healthy growth, while only marginally increasing revenue volatility at the state level. Whether or not the Legislature chooses to revisit the MHSA reserves policy, we recommend that the Legislature use this opportunity to address MHSA revenue volatility head on. Further, we find that the current-law reserve caps are too low. In light of this volatility, allowable reserves under the Governor’s proposal would be inadequate during an economic recession. Adequate reserves are particularly important for counties given extreme MHSA revenue volatility.
#True bond part 3 series#
This post-the first in a series of planned reports-analyzes a specific proposal to lower the cap on allowable county reserves of Mental Health Services Act (MHSA) revenues.
In March, the Governor proposed a broad package of changes intended to “modernize” the state’s behavioral health system, combined with additional funding for behavioral health housing. Mental Health Services Act Revenue Volatility and the Governor’s Proposal to Reduce Allowable County Reserves
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