California Doesn’t Know How It Spent $13 Billion in Mental Health Money

Wednesday, January 28, 2015

Ten years after state voters passed Proposition 63, the “Millionaires Tax,” and raised $13 billion for treatment of mental health, there is no way to tell if it did any good.

That’s the judgment of the independent, nonpartisan Little Hoover Commission in a report (pdf) released this week on the Mental Health Services Act, as the proposition is formally known. “The state cannot adequately quantify an anecdotal sense that the act has made California a better place for the estimated 2.2 million adults with a mental health need and their families,” Commission Chairman Pedro Nava said in an introduction addressed to legislative leaders.

“Has homelessness declined? Are programs helping Californians stay at work or in school? Who is being served and who is falling through the cracks?” the report asks.

Your guess is as good as theirs.

The commission was particularly interested in how a decade of implementation worked, considering the “severe economic downturn that annihilated mental health and social service budgets” over the past five years. The $1 billion a year that the tax on California’s wealthiest residents produced—1% on personal income above $1 million—ended up being about 25% of the money spent on mental health.

But “antiquated state technology and overlapping and sometimes unaccountable bureaucracies” make oversight difficult, to say the least. In the years since the Act’s passage in 2004, the Legislature has used its limited authority to improve the law’s implementation with “mixed results.”

Nonetheless, the commission recommends they try some more. Lawmakers empowered the Mental Health Services Oversight and Accountability Commission by making it independent, but Little Hoover said they need more power. It recommended they be given the authority to conduct reviews of the more controversial programs and the power to impose sanctions if they don’t like what they find.

The commission also recommended that the Department of Health Care Services (DHCS) be directed to develop a system for monitoring Prop. 63-funded programs and that the state website be upgraded to give the public info on how money is spent.

The proposition’s stated goal was to keep mentally ill people out of jail, out of hospitals and off the streets. It also had the stated purpose of ensuring that “all funds are expended in the most cost-effective manner and services are provided in accordance with recommended best practices.”    

The commission did not assert that the law was ineffective. In fact, it “heard no testimony that the act has not worked.” Nary a discouraging word, apparently. But without data to prove that, a skeptical public might wonder if its $13 billion could have been more effectively applied.

The commission noted that lawmakers had amended the Act four times over the years, and not always with spectacular results. Frustrated by the state bureaucratic process that was delaying getting money to the streets where it was needed, lawmakers intervened to direct big chunks to the counties for distribution. No one kept close tabs on the counties.

In years leading up to the Great Recession, and especially when it hit, the state began using the Prop. 63 money, intended to supplement existing budgetary funding, as the base. “Policymakers eliminated the Department of Mental Health, shifting responsibility for oversight of the act to various state entities and creating new confusion and oversight challenges.”

Lawmakers probably had a pretty good idea what the Little Hoover Commission was going to tell them. The California State Auditor said much the same thing in a 2013 report (pdf) whose subtitle noted, “The State’s Oversight Has Provided Little Assurance of the Act’s Effectiveness.”

Auditor Elaine Howle wrote,

“We expected that Mental Health and the Accountability Commission would have used a process to monitor, guide, and evaluate county implementation that built on their broad and specific MHSA oversight responsibilities and also incorporated best practices in doing so, but that is not what we found.”

–Ken Broder


To Learn More:

Report Rips California’s Oversight of Mental Health Initiative (by David Siders, Sacramento Bee)

State Fails to Track Billions in Mental Health Funds (by Juliet Williams, Associated Press)

Mental Health Services Act (California State Auditor) (pdf)

Promises Still to Keep: A Decade of the Mental Health Services Act (Little Hoover Commission)

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