Newsom proposes a bond measure, sweeping mental health reform in California

Gov. Gavin Newsom is calling on lawmakers and voters to approve sweeping mental health reforms that would provide billions of dollars in state funding for behavior-based housing and treatment facilities across California.

The Democratic governor’s proposal, unveiled Sunday in San Diego, would raise at least $3 billion through a bond operation to fund construction of new mental health campuses, residential facilities and permanent supportive housing. Newsom plans to divert an additional $1 billion annually from an existing top-income income tax to run the facilities, his office said.

“It’s unacceptable what we’re dealing with now on a large scale in the state of California,” Newsom said during an event at Alvarado Hospital Medical Center to announce his plan. “We need to confront and confront the reality of mental health in this state and our nation.”

The governor’s call for a 2024 ballot measure to modernize the state’s behavioral health system is the capstone of his state of the state tour.

Rather than deliver a traditional speech to lawmakers in the Capitol this year, Newsom toured California to present his policy agenda for his second term. The governor unveiled an ambitious goal in Sacramento to reduce homelessness statewide, traveled to San Quentin to announce the conversion of the maximum-security prison into a rehabilitation center, and promoted a new contract in Downey to manufacture low-cost insulin under a state labels.

The governor’s aides presented his efforts to overhaul the state’s mental health system as an opportunity to end decades of failure to build an effective community-based system in California. Newsom often points to former Gov. Ronald Reagan’s efforts in the late 1960s to end compulsory incarceration and close state mental hospitals as the main reason why so many people are living on the streets or behind bars today.

A stronger mental health system is essential to Newsom’s agenda to reduce homelessness and repair the criminal justice system. At a time when violent crime is on the rise and voters remain frustrated at the lack of progress on the homeless crisis, it’s also vital to the Democratic governor’s legacy.

“He’s committed to it,” said Sean Clegg, one of Newsom’s senior policy strategists. “He will lead, and he will spend his political capital.”

A key component of Newsom’s plan is reform Mental Health Services Act 2004, which was approved by voters under Proposal 63 introduce a 1% income tax for millionaires in California to support funding for county-run services.

Funding has fluctuated over the years but is roughly balanced $3.3 billion in fiscal 2022-23, according to the impartial Legislative Analyst’s Office. Proposition 63 funding now accounts for about 30% of the state’s public mental health system, the governor’s office said.

Newsom’s announcement would overhaul the funding structure to redirect 30% of Proposition 63 funds, or approximately $1 billion, each year to operating community shelters for people at risk of, or currently experiencing, homelessness and those living with homelessness severe mental illness and addiction. A portion of the homes created would be reserved for veterans in California.

The proposal also includes changes to Proposition 63 that would allow money to be spent solely on substance use treatment for eligible individuals, which the governor’s office says is currently not allowed.

The governor’s office said the bond measure it proposed for the 2024 vote would fund enough new mental health care beds to serve more than 10,000 additional people each year. The state has 6,000 health beds available, its staffers said. Newsom said the goal is to raise between $3 billion and $5 billion with the bond operation.

“That’s a great idea. In the state of California, it’s half a century overdue,” Newsom said.

Sacramento Mayor Darrell Steinberg, who helped write Proposition 63 as the state legislature, said he supports Newsom’s changes.

“We’re approaching 20 years, and after nearly two decades, there’s always time to update and modernize a good piece of legislation and focus it more on the most serious consequences of untreated mental illness,” Steinberg said.

Steinberg said Proposition 63 has helped “hundreds of thousands of people” but there is a need now to focus more on people living in homeless camps with serious mental illnesses and those coming out of the criminal justice system.

“There is already a focus. You just have to focus more,” he said.

Los Angeles Mayor Karen Bass said Newsom’s plan will create more space for those in need.

“These reforms will help us deal with the crisis on our streets and bring more Angelenos home with the support they need,” Bass said in a statement. “I support these efforts and look forward to working with the governor and legislature to ensure their success in voting.”

State Senator Susan Eggman (D-Stockton) said she will unveil and put to a vote legislation implementing Newsom’s plan. Proposition 63 is a strong start to address California’s mental health crisis, Eggman said, but she agrees it’s time for a “transformation.”

The changes will spur construction and sustainable funding for “homes that heal,” but are so scarce, she added. This could include new cabin communities or residential accommodation for adults that are less restrictive and more neighborhood-oriented than gated facilities that separate people from the general population.

Sunday’s announcement would add to a number of recent changes lawmakers have made to retool California’s mental health and behavioral health care system since its last major overhaul six decades ago.

This includes expanding Medi-Cal and giving inmates some benefits before they are released from prison. Eggman was one of two lawmakers last year who helped pass Newsom’s new program to treat people with serious mental illness, known as CARE dish (for community assistance, recovery and empowerment).

The plan called for a new court system that would force treatment for people with serious mental illnesses, a population the state estimates at between 7,000 and 12,000 people. Eight counties, including Los Angeles, are expected to introduce CARE courts this year, and the rest of the state will join in 2024.

The CARE Court will allow family members, first responders and healthcare professionals, among others, to request a judge to order an examination of an adult with a diagnosed psychotic disorder to determine what services that person needs.

Organizations representing families of affected loved ones strongly backed Newsom’s ambitious new program, but the proposal sparked fierce opposition from disability and civil rights advocates, who spent much of the year raising serious concerns that CARE courts are restricting personal liberties and vulnerable people would infiltrate the legal system.

In January, many of the same groups that campaigned against the CARE court filed a lawsuit asking the state Supreme Court to block implementation of the new law that Newsom signed into law in September Senate Act 1338.

That year, Eggman introduced a bill to expand the definition of “severely disabled people” used to determine whether someone qualifies for conservatorship. The change could mean more people could qualify for a conservatorship if their mental or physical health poses “a significant risk of serious harm” as a result of their conditions.

“I think all those pieces that we put together and that repetition [the Mental Health Services Act]will be the last major piece of transformation,” Eggman said.

Andy Imparato, executive director of Disability Rights California, said more money for psychiatric shelters is a good thing and Newsom’s announcement appears to be largely welcome news.

While a key part of Newsom’s reform efforts would be to increase accountability and transparency around access, quality and spending on the county’s behavioral health and Medi-Cal plans, Imparato said there are concerns about how some counties spend Proposition 63 funds. He wants to make sure the money for new homes isn’t diverted from other treatment services.

Michelle Doty Cabrera, executive director of County Behavioral Health Directors Assn., agreed.

“We want to thank the governor for listening to our requests to address the lack of housing options for customers,” Cabrera said. “However, these investments must be additive rather than shifting resources away from upstream prevention and treatment. There is no way we will end this crisis without both housing and treatment services.”

Imparato also said Disability Rights California and other organizations that have strongly opposed the CARE Court may still be reluctant to work with Newsom on another mental health initiative.

It will be crucial, Imparato said, that peer supporters and those with lived experience of mental illness and substance use disorders have a seat at the table of this year’s proposal.

“I hope we’ll see more of a collaborative approach,” he said.

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