Mental Health: Facts & Analysis

This initiative would enact a new law to increase funding for mental health services to individuals who are not eligible for treatment through federally sponsored programs or their own health insurance plans. The additional revenue generated would be used exclusively to develop and expand integrated mental health services for children, adults, and seniors, including prevention, early intervention, education, and training programs.

The major ($100,000+) contributors for the Prop. 63 signature drive were: California Council of Community Mental Health Services; California Teachers Association Issues PAC; Service Employees International Union Cope PEA/SEIU General Fund; Mental Health Association in Los Angeles County; California Healthcare Association; and Morongo Band of Mission Indians.

The argument in favor was written by Deborah Burger, president, California Nurses Association; Cam Sanchez, president, California Police Chiefs Association; and Barbara Kerr, president, California Teachers Association. The argument against was written by William Allen, professor emeritus, UCLA Department of Economics; Assemblyman Roy Haynes; and Lew Uhler, president, National Tax Limitation Committee.

Prop. 63 imposes an additional 1 percent income tax on income greater than $1 million. Individuals whose income is less than $1 million will pay no additional taxes. The Legislative Analyst's Office estimates that Prop. 63 would generate $275 million in revenues for mental health services in partial fiscal year 2004-05. In the following years, revenues are predicted to increase to approximately $800 million per year. Prop. 63 would prohibit the state from decreasing funding for mental health services below 2003-04 levels.

After the counties are informed of the amount of funds available for services, they will be required to submit mental health spending plans that will be reviewed by a newly created Mental Health Services Oversight and Accountability Commission. The commission is to be made up of 16 members, including representatives from state and local government, as well as an insurer, a mental health professional, a physician, two mentally ill individuals and two family members of mentally ill individuals (one adult and one child), a county sheriff, a school superintendent, a union representative, a health care services representative, and two employers—one with fewer than 500 employees and one with more than 500 employees. The commission will ensure that county spending plans are developed in accordance with mandates of Prop. 63.

In the partial year 2004-05, 45 percent of revenues must be spent on education and training of mental health professionals; 45 percent will be spent on capital facilities and technology needs; 5 percent would be spent on local planning expenses; and the remaining 5 percent on state implementation expenses.

In 2005-08, 10 percent would be spent on education and training of mental health professionals; 10 percent on capital facilities and technology needs; 20 percent on prevention and early intervention programs; and 5 percent on innovative programs to increase access to and quality of mental health services. In addition, up to 5 percent could be used to offset state implementation costs and up to 5 percent could be used each year for county planning and administration. The remaining funds would be spent on mental health services for persons with severe mental illness, unless the county successfully meets requirements to use some of these funds for prevention and early intervention programs.

Prop. 63 is supported by the Campaign for Mental Health.

There is no officially organized opponent to Prop. 63. Three individuals wrote the arguments against: William Allen, professor emeritus, UCLA Department of Economics; Assemblyman Roy Haynes; Lew Uhler, president, National Tax Limitation Committee.

More than 2 million children, adults, and seniors in California are affected by mental illness. It is estimated that a third of the homeless in California are mentally ill, and approximately 24,000 people in California state prisons have mental disabilities.

Some 25,000 to 30,000 Californians, representing about 0.1 percent of the state’s total population, are estimated to earn more than $1 million annually. If Prop. 63 passes, the tax rate for these taxpayers would increase from 9.3% to 10.3% on every dollar over $1 million.

Studies by the Department of Health indicate that mental health programs similar to those promoted by Prop. 63 have generated significant savings that would probably accrue to local governments. The Legislative Analyst’s Office says the amount to be saved under Prop. 63 is unknown, but the potential statewide savings could be as much as the low hundreds of millions of dollars annually. For example, the law enforcement community estimates it spends up to $1.8 billion per year dealing with people with mental illnesses.

Prop. 63 will create the Mental Health Services Oversight and Accountability Commission, which will review and approve every county’s mental health spending plans and ensure that local mental health stakeholders have been included in the process. Spending guidelines are designed to channel money into programs with proven records of success. Most funds will go to existing programs, but a small percentage will be allotted for new programs. All Prop. 63 expenditures will be audited by state and local agencies.

Prop. 63 prohibits the state from using the money raised for any purpose other than mental health services. In addition, the law forbids the Department of Mental Health from using Prop. 63 revenues to provide loans to the state’s General Fund or other state or county funds.

By prohibiting the state from decreasing financial support below 2003-04 level, Prop. 63 constrains the legislature’s budget-setting role.

According to the Legislative Analyst’s Office, expanding county health services may result in additional federal funds for community mental health services through the Medi-Cal program.