Prop 1 Passes in Squeaker Election, Changing How Counties Spend Mental Health Funds

For the first time in two decades, California will make changes to its fragmented mental health system. Proposition 1, the only statewide measure on the March 5 ballot, has passed by a razor thin majority of 50.20%. The measure authorizes $6.4 billion in bonds for new housing and treatment facilities for those with mental health and substance abuse issues. It also changes how Mental Health Services Act (MHSA) funds are distributed, shifting around $140 million from counties to the state.

A Close Call for the Governor

A Proposition 1 defeat would have been an embarrassment for Gov. Gavin Newsom, who campaigned vigorously for the measure. While it ultimately passed, the close results underscore voter distrust when it comes to government spending on homelessness. The Newsom administration has already spent over $20 billion on the crisis, yet the latest point-in-time homeless count from 2023 found over 180,000 people experiencing homelessness in California. That’s a 6% increase from the previous count. Because some jurisdictions only counted sheltered homeless, the real figures are likely higher.  

The Impact on Local Governments

Currently, counties are not required to spend MHSA funds on support services like housing or substance abuse treatment. Under Proposition 1, counties will be required to spend more on these services, leaving less money available for other mental health programs. The measure also brings counties’ share of MHSA funds down from 95% to 90%.

Butte County Behavioral Health Director Scott Kennelly told North State Public Radio that some existing behavioral health services are now in jeopardy because the county must shift $6 million to housing.

On the other hand, Proposition 1 will make grants available to local governments to fund more health care, drug treatment, and housing options. The measure promises to add 4,350 new housing units – half of them reserved for veterans – plus 6,800 mental health and drug treatment beds.

Last week, Newsom called on local governments to help ensure the program's success.

"This is the biggest change in decades in how California tackles homelessness, and a victory for doing things radically different," the governor said. "Now, counties and local officials must match the ambition of California voters. This historic reform will only succeed if we all kick into action immediately – state government and local leaders, together."