NOW AVAILABLE: BHSA Revenue Stability Workgroup Report

This week, the Department of Health Care Services (DHCS) released the Behavioral Health Services Act Revenue Stability Workgroup Report. CSAC is sharing this report with counties to highlight the key recommendations and gather feedback on the fiscal and programmatic impacts should these recommendations be implemented through future legislation or the state budget process.  

How We Got Here  

Proposition 1, approved by California voters in March 2024, includes major reforms to the state’s behavioral health system and expands supportive housing and treatment resources. One of the two bills included in this measure, SB 326 (Eggman, Chapter 790, Statutes of 2023), required the California Health and Human Services Agency (CalHHS) and DHCS to convene a Behavioral Health Services Act Revenue Stability Workgroup. As required in statute, the workgroup included representatives from CSAC, with both rural and urban counties participating. The workgroup was tasked with developing recommendations to reduce the Behavioral Health Services Fund’s (BHSF) revenue volatility to better support the sustainability of county programs.  

CSAC, along with county executive representatives and representatives from the County Behavioral Health Directors Association (CHBDA), concluded their participation on the workgroup at the end of 2024 and have since been awaiting the release of this report. The recommendations in the report are expected to be introduced through budget trailer bill language. County participants in the Workgroup did not author or endorse the recommendations presented in the report. 

Summary of Report Recommendation: 

• Establish an annual minimum expenditure level for each county for local BHSF based on historical county BHSA revenue distribution data and a three-year trailing weighted average. 

• Counties would be required to spend at least the minimum expenditure level annually on BHSA programs, consistent with the local Integrated Plan or Annual Update. 

• Counties would receive updated minimum expenditure levels annually. If the county’s updated minimum expenditure level is more than 10 percent higher or lower than the prior year’s minimum expenditure level, counties would be required to complete a budget update in the Integrated Plan or Annual Update. 

• Counties may continue to establish a local prudent reserve up to a maximum of 10% for medium and large counties and 15% for small counties if the average of the total BHSA and/or MHSA funds distributed to the county in the preceding five years. Note: under BHSA prior to 2026, counties are allowed to fund their local prudent reserve up to 20% for large counties and up to 25% for small counties.  

• Counties would be required to implement a one-time decrease of their prudent reserve for the Fiscal Years 2026-2029 Integrated Plan to adhere to the new maximum prudent reserve levels. Counties would have local discretion on how to spend the excess prudent reserve funds for the one-time decrease and be allowed to exclude the excess prudent reserve funds from prescribed BHSA component funding allocation percentages (30% Housing Interventions 35% Full Service Partnership and 30% Behavioral Health Services and Supports).  

• If the local prudent reserve is accessed due to a downturn in the economy, counties would be allowed to use prudent reserve funds at local discretion for services or programs identified in an approved Integrated Plan or annual update, and in accordance with the BHSA components allocation requirements. 

• Establish a budgetary revision process that will allow counties to reduce the minimum expenditure level amounts if forecasted local assistance revenue is less than the calculated minimum expenditure level. 

Next Steps 

As noted above, it is anticipated that the recommendations included in the report will be included in a legislative or budget proposal, likely in the form of budget trailer bill language. CSAC Is requesting county feedback on the fiscal and programmatic impacts should the report recommendations be enacted. Please send your comments to Danielle Bradley at dbradley@counties.org.