Title
Receive a report on the Mental Health Services Act (MHSA) fund balance.
Report
RECOMMENDATION:
It is recommended that the Budget Committee of the Board of Supervisors:
Receive a report on the Mental Health Services Act (MHSA) fund balance.
SUMMARY/DISCUSSION:
At the October 2019 Budget Committee (BC) meeting, the Monterey County Health Department’s Behavioral Health Bureau (Bureau) presented an overview of Proposition 63, the Mental Health Services Act (MHSA), and the status of MHSA reserves. During the presentation, staff indicated that new developments affecting the MHSA fund balance would be presented to the Budget Committee, which occurred during the January 2020 meeting. At this meeting, the Budget Committee requested quarterly reports on the MHSA fund balance. At the June 30, 2021, meeting, the Committee moved to a semiannual report. This report serves as the most recent update on the fund balance, additional information regarding the MHSA, and potential impacts on the fund balance.
In addition to the quarterly/semiannual reports to BC, on March 1, 2022, the Board of Supervisors (BOS) submitted Referral No. 2022.11 requesting a comprehensive presentation from the Bureau on the current uses of MHSA funds, an expenditure plan to utilize reserve funds and annual updates to the BOS on expenditures and effectiveness of MHSA funded services and strategies. The comprehensive presentation was first brought to the BC at its April 25, 2022, meeting and subsequently to the BOS at its June 21, 2022, meeting with annual updates to be presented in the future, as requested by the BOS. The most recent update to the BOS occurred at its August 22, 2023, meeting in which the Bureau provided a report on AB531 and SB326 which will be placed on the March 2024 general election as Proposition 1.
FY 2022-23 In Review
The FY 2022-23 beginning MHSA fund balance was $41,782,873 with budgeted revenues estimated at $39,363,786 and budgeted expenditures at $41,278,361 for an estimated budgeted ending MHSA fund balance of $39,868,298, please reference Attachment A, Table 1, Graph 1. Projected final revenues (pending Annual Revenue and Expenditure Report (ARER) submission and approval) for FY 2022-23 were $23,730,057. The Bureau reported on this projected decrease in revenues in the July 2023 BC report noting that this decrease was due, in part, to income tax filing extensions by the Internal Revenue Service and the Franchise Tax Board due to the 2021 winter storms. Final expenditures for FY 2022-23 (pending ARER submission and approval) were $49,090,370. The increase in expenditures is attributed to increases in services in all components. The actual ending MHSA fund balance for FY 2022-23 was $16,422,560. This represents a decrease of $23,445,738 to the beginning fund balance of $41,782,873, please reference Attachment A, Table 1, Graph 1. The Bureau will report the final actual figures at the July report, once ARER is approved by the Department of Health Care Services (DHCS).
FY 2023-24 Budget and Forecast
For the current FY 2023-24, at budget submission, the Bureau estimated $39,894,716 in MHSA revenues. However, after budget submission, additional information has been obtained regarding the two-year “catch-up” and income tax extensions which increased MHSA revenue projections to $54,523,068. Even further, as of the time of this report, the estimated revenue has once again been adjusted to reflect the actual revenue received to date and projections for the remainder of the FY, reducing the figure to $43,773,352. Please reference Attachment A, Table 2, Graph 2. On the expenditure side, for FY 2023-24, the Bureau budgeted $39,894,716 in expenditures. Given current trends and projections, the Bureau estimates actual expenditures to be $44,070,325. This is mainly due to an increase in services. The Bureau projects a further reduction to the MHSA fund balance in FY 2023-24 of approximately $296,973 from $16,422,560 to $16,125,587 as shown in Attachment A, Table 2, Graph 2. The Bureau will provide updates on these figures at the July 2024 BC meeting.
FY 2023-24 Reversion Risk
For FY 2023-24, the Bureau identified $1,178,652 in Prevention and Early Intervention (PEI) funds that are at risk of reversion if not spent by June 30, 2024. As of the date of this report, the Bureau has already expended these funds and eliminated the risk of reversion.
Proposition 1
On March 19, 2013, Governor Newsom announced a strategy to reform the State’s Behavioral Health System. The strategy is a combination of Senate Bill 326 (SB326) and Assembly Bill 531 (AB531) which will be placed on the March 2024 ballot as Proposition 1. The Bureau made two presentations to the BOS in May and August 2023 to provide an overview of these two bills. While Proposition 1 will revamp MHSA, below are some items that are projected to have bigger impacts on the fund balance:
• Expand services to include Substance Use Disorders (SUD) and rename the MHSA to the Behavioral Health Services Act (BHSA).
• Increases State allocation of total BHSA funds from 5% to 10% to be used as follows:
o 4% for statewide population-based prevention to increase awareness about behavioral health resources.
o 3% for workforce investments to expand culturally competent and well-trained behavioral health workforce.
o 3% for Statewide oversight and monitoring to develop statewide outcomes, conduct oversight of county outcomes, train and provide technical assistance, research and evaluate, and administer programs.
• Modernize the remaining 90% of total BHSA County allocations as indicated in Attachment A, Graph 3 as follows:
o 30% for housing interventions for individuals and families with serious mental illness (SMI)/serious emotional disturbance (SED) and/or SUD who are experiencing homelessness or are at risk of homelessness. 50% must be prioritized for housing interventions for the chronically homeless and up to 25% may be used for capital development.
o 35% for Full-Service Partnership (FSP) programs.
o 35% for Behavioral Health Services and Supports (BHSS) to include early intervention, outreach and engagement, workforce education and training, capital facilities, technological needs, and innovative pilots and projects.
o Provide Counties with flexibility to transfer up to 7% from one category into another for a maximum of 14% more added into any one category to address local needs but must be approved by the community and Department of Health Care Services.
• Limits Prudent Reserve (PR) amount from 33% of the preceding five-year Community Services and Support average to 20%.
• Replaces the existing MHSA Annual Revenue and Expenditure Report (ARER) with the Outcomes, Accountability and Transparency Report (OATR) requiring Counties to report on all local behavioral health funding sources and services, including Medi-Cal.
The Bureau will continue to analyze impacts due to Proposition 1 as well as monitor all funding streams closely and will adjust where necessary as soon as the need is identified. The Bureau will apprise the Budget Office of these developments and will seek its collaboration on any required actions.
OTHER AGENCY INVOLVEMENT:
No other departments were involved.
FINANCING:
There will be no impact on the General Fund in receiving this report.
BOARD OF SUPERVISORS STRATEGIC INITIATIVES:
Check the related Board of Supervisors Strategic Initiatives:
☐ Economic Development:
• Through collaboration, strengthen economic development to ensure a diversified and healthy economy.
☒ Administration:
• Promote an organization that practices efficient and effective resource management and is recognized for responsiveness, strong customer orientation, accountability and transparency.
☒ Health & Human Services:
• Improve health and quality of life through County supported policies, programs, and services; promoting access to equitable opportunities for healthy choices and healthy environments in collaboration with communities.
☐ Infrastructure:
• Plan and develop a sustainable, physical infrastructure that improves the quality of life for County residents and supports economic development results.
☐ Public Safety:
• Create a safe environment for people to achieve their potential, leading businesses and communities to thrive and grow by reducing violent crimes as well as crimes in general.
Prepared by: Fabricio Chombo, Finance Manager II, 755-4578
Approved by:
__________________________Date______________________
Elsa Mendoza Jimenez, Director of Health Services, 755-4526
Attachment(s):
Board Report
Attachment A - Tables 1 and 2, Graphs 1, 2 and 3