State Audit Slams Counties for Hoarding Mental Health Money, But There Are Deeper Problems With MHSA

In 2004, California voters approved a 1 percent income tax on millionaires in the hopes of fixing the state’s mental health crisis. Fourteen years later, much of the money has not been spent. Meantime, confusion, frustration, and legal wrangling abound.

Some of the problems are outlined in this recent state audit which criticizes a number of California counties for sitting on over $200 million in funds that were supposed to go toward mental health services under MHSA. But, as the report’s internals make clear, the state bears plenty of blame.

According to State Auditor Elaine Howle, by the end of the 2015-2016 fiscal year, $1.5 billion had been amassed from the measure. The state then allocated $1.4 billion to 59 local mental health agencies, but $231 million of that money went unspent.

The audit found that the state’s Department of Health Care Services’ failure to develop a process for recouping any unspent funds contributed to the problem. The counties are supposed to return any unspent money within three years but, absent that process, there was little incentive to spend the money in a timely fashion. Then last year, legislators pushed the period of repayment back even further, enacting a one-time change allowing agencies to hold onto some of the funds until 2020.

Assemblyman Todd Gloria (D-San Diego) wants to see the time period for repayment shortened to two years. The latest audit, he says, underscores the need for such legislation. It should be noted that San Diego appears to be one of the counties that was spending the funds appropriately, albeit not as quickly as some would have hoped.

Aside from the lack of incentive to spend the funds, auditors flagged poor oversight of programs and projects funded by the law. Local mental health agencies are supposed to submit reports to the oversight commission for review and technical assistance with these projects, but the panel “has not completed an internal process for reviewing any of these reports,” the auditor said.

The problems plaguing MHSA don’t end there. The state has also been engaged in a legal tussle with a Sacramento attorney over whether or not it can allocate some of Prop 63’s revenue to housing construction for the homeless. Senate President Pro Tem Kevin de León has argued that it most certainly can, citing the link between mental health and homelessness. But attorney Mary Ann Bernard says that would be unconstitutional, as Prop 63 never specified that the money would be used for housing bonds.

“I recognize that housing is needed, but stealing treatment money from the severely mentally ill is despicable and counterproductive,” she said.

Between the hoarding, legal questions, and lax oversight, what is clear is that MHSA needs some sort of fix.

“It’s remarkable just how poorly MHSA has been implemented,” writes the Orange County Register Editorial Board.  “Implementation of Prop. 63 has been a case study for how a perfectly reasonable idea can be poorly put into place even with assurances of accountability. California and local mental health agencies must do better.”