CSAC Bulletin Article

Update on Governor’s Legislative Proposal to Modernize California’s Behavioral Health System

August 17, 2023

Earlier this week late on Tuesday evening, the first set of amendments to Governor Newsom’s legislative proposal, SB 326 (Eggman), to modernize the state’s behavioral health system, came into print. CSAC continues to review the significant changes made to the initial proposal and assess their impacts on counties.

A few of the notable changes include:

  • Revised funding categories:
    • 30% Housing Interventions
    • 35% Full-Service Partnerships
    • 35% Behavioral Health Services and Supports (increase from 30%)
    • Removal of 5% for Population-based Prevention (shifted to the state – see below)
  • Some limited flexibility added to transfer funds between categories, but subject to specific requirements, and review/approval by the Department of Health Care Services (DHCS):
    • 2026-2029 Plan: up to 7% from each category, up to a maximum of 14% to one program or across programs.
    • 2029-2032 Plan: up to 6% from each category, up to a maximum of 12% to one program or across programs.
    • Starting with 2032 and ongoing: 5% from each category, up to a maximum of 10% across programs.
    • Specifies that upon approval of DHCS, allocation adjustments are irrevocable during the applicable three-year period. Specifies that a county shall not adjust the allocation of funds in the county’s subsequent annual and intermittent updates to the county’s integrated plan.
  • Some flexibilities added for small counties (population less than 200,000), but subject to a DHCS-established process and approval.
  • Shift of additional funds from counties to state-directed purposes (up to 10% of total BHSA, including the 3% for a statewide workforce initiative and 2% for state administration):
    • Transfers the “population-based prevention” category from counties to the state, to be administered by the Department of Public Health, and specifies an allocation of a minimum of 4% (instead of 5%) of total BHSA resources.
  • Adds a categorical requirement for 51% of the early intervention category (which is 51% of the BHSS category) to be provided to individuals aged 25 years or younger, and the authority for DHCS to specify additional categorical allocation requirements in the BHSS category remain.

On Wednesday, the Senate Health Committee held an informational hearing on the proposal, which included a presentation by the Administration, and comments by the Legislative Analyst’s Office, the Mental Health Services Oversight and Accountability Commission, and a broad panel of stakeholders. Phebe Bell, Behavioral Health Director for Nevada County, spoke on behalf of counties, and provided a thoughtful and impactful presentation on how the proposed changes would impact small, medium, and large counties.

Also, on Wednesday, the Department of Health Care Services (DHCS) and the California Health & Human Services Agency (CalHHS) hosted a brief informational webinar to provide a high-level summary of the status of proposed behavioral health reform legislation. Copies of the webinar recording and presentation slides are now available. 

Next week on Tuesday, August 22, the Assembly will hold a joint informational hearing of the Assembly Health and Housing and Community Development Committees on the Governor’s proposal. Counties will be represented on two panels of the hearing, which will include Santa Cruz County Supervisor Zach Friend, who will speak on behalf of counties on the behavioral health impacts of the proposal. The informational hearing will be immediately followed by the policy committee hearing on the bill, where the Assembly Health Committee will vote on the measure.


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