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The Next Step to Modernize California’s Behavioral Health System

Modernizing Our Behavioral Health System

Since 2019, California has embarked on massive investments and policy reforms to re-envision how the state treats mental health and substance use disorders, collectively known as the behavioral health system.

Our ongoing re-envisioning of the behavioral health system has already seen more than $10 billion in investments that range from prevention and early intervention programs for kids, to investments in programs like the CARE Act and system improvements in Medi-Cal through CalAIM that begin to build up the community-based care the sickest Californians desperately need.

But more can and must be done. Now it’s time to take the next step and build upon what we have already put in place – continuing the transformation of how California treats mental illness and substance use disorders.

 Three Key Elements of Governor Newsom’s Proposal:

  • A Bond to Fund Behavioral Health Expansion and Housing for Homeless Veterans
  • Modernizing the Mental Health Services Act
  • Making Today’s System of Care Work Better for All Californians

We look forward to working with the legislature, system and implementation partners, and a broad set of stakeholders, including those impacted by behavioral health conditions, to set these reforms into motion to deliver equitable, accessible, and affordable community-based behavioral health care for All Californians. For questions and inquiries, contact

Three Key Elements of Governor Newsom's Proposal


California’s shortage of 6,000 behavioral health beds contributes to the growing crisis of homelessness for those with mental illness and substance use disorders, and 55% of homeless veterans suffer from mental health issues and 70% are affected by substance use disorders.

  1. Housing for Homeless Veterans: Provide funding to house homeless veterans.
  2. Multi-Property Settings: Residential campus-style settings where multiple individuals can live, attend groups, recover and further stabilize with a number of onsite supportive services available to meet individually tailored care plans.
  3. Cottage Settings: Smaller residential settings, where many services will be available but will also allow individuals to access existing services in the community.
  4. Home Settings: Permanent Supportive Housing and Scattered Site Housing offer even smaller settings – home-like or single units to further integrate individuals into the community and provide long-term housing stability.

Together building this range of residential options will ensure that individuals can transition to the level of care they need while connecting to their communities and thriving.  

The Mental Health Services Act (MHSA) has fundamentally changed how we deliver mental health care in California. For those with the most serious and persistent needs, the MHSA requires every county in the state to offer a core set of services through a program called Full-Service Partnerships (FSP) that today helps keep some individuals off the streets, out of jails, and out of expensive hospital care. Today over 80,000 Californians are enrolled in FSP programs.

Today, MHSA funds 30% of the state’s mental health system. But the MHSA has never undergone full scale reform. Since its initial passing in 2004, the Affordable Care Act and parity laws have significantly shifted the landscape and now is the time to modernize MHSA to account for expanded coverage under Medi-Cal. Proposed reforms include:

  1. $1 billion annually to pay for housing and other community-based residential solutions to provide an ongoing source of funding for new and existing housing and residential settings that are responsive to the diverse needs across the state.
  2. Focus funding on Full-Service Partnerships and other services for the most seriously ill, prioritizing community services and supports while including prevention and early intervention and infrastructure investments such as for capital and workforce.
  3. Require counties to bill Medi-Cal for all reimbursable services in accordance with Medicaid State Plan and applicable waivers, to further stretch scarce dollars and leverage MHSA to maximize federal funding for services.
  4. Include those with substance use disorders who can be served by MHSA funding, broadening the target population to include more people who need support.
  5. Improve county accountability and increase transparency updating theThree-Year County Plan requiring counties to create comprehensive behavioral health plans, and move the Mental Health Services Act Oversight and Accountability Commission under the California Health & Human Services Agency, to increase coordination and outcomes.

The foundation of our core behavioral health systems is unsteady with gaps and holes. To stabilize and strengthen this foundation, two major reforms are proposed:

  1. Align behavioral health benefits across all health plans in California so All Californians enjoy access to the care they need. This will require close partnership with both Medi-Cal and commercial health plans to address opportunities to build needed programs and capacity . 
  2. Significantly increase accountability for services provided and outcomes achieved for all Californians through greater reporting expectations and transparency around access, quality, equity, and cost/revenue data applied to all county behavioral health plans.

Additional Resources

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