Mental Health Services Funding: Facts & Analysis

Proposition 1E would cut $460 million in funding for the expansion of mental health services and place that money in the state's General Fund. It would do this by amending Prop. 63, which increased taxes on those earning more than $1 million per year to pay for new mental health programs. Although Prop. 1E earmarks the funding for the federally mandated Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program, it allows the legislature to take the same amount out of the General Fund and use it for other purposes. Given the state budget crisis, the likely result will be to diminish overall state funding for mental health programs.

California voters approved Prop. 63 in 2004 with 53% of the vote. Prop. 63 taxed those earning more than $1 million per year to increase mental health funding for those who are ineligible for treatment through federally sponsored programs or their own health insurance plans. Prop. 63 revenues are used exclusively to develop and expand integrated mental health services for children, adults, and seniors, including prevention, early intervention, education, and training programs.

The California Legislature placed Prop. 1E on the May 19, 2009, special election ballot by a two-thirds majority vote. It is one of six ballot measures designed to reduce the state's $42 billion budget gap.

In the California Senate, 36 out of 39 senators voted to place Prop. 1E on the May 19  ballot. Two senators voted against it and one either abstained or failed to vote (Senate District 26 is vacant). In the California Assembly, 76 members supported and 4 opposed placing the measure on the ballot.

In order to address the $42 billion budget gap, the California Legislature has placed a package of six measures on the ballot that include about $15 billion in spending cuts, an estimated $11.1 to $12.5 billion in tax increases, $5 billion in borrowing from future lottery profits, and an assumed $8 billion in funds from the federal economic stimulus package.  Prop. 1E cuts about $227 million or about 1.5% of the $15 billion in reduced spending proposed by the legislature for this year.

Over two years, the proposition cuts $460 million from the expansion of mental health services and diverts those revenues to the federally mandated Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program. The EPSDT program provides Medi-Cal beneficiaries under age 21 with a variety of screening and diagnostic services—including mental health services. The California Legislature is required by federal law to fund EPSDT. If Prop. 1E is not approved by voters, the legislature will appropriate General Fund revenues to support EPSDT and return to the bargaining table to balance the state budget.

According to the Legislative Analyst's Office, reductions in mental health care spending could have several unintended consequences: (1) Some Prop. 63 funds are matched at the federal level through the Medi-Cal program, thus reductions in mental health spending could decrease California's federal financial support;  and (2) Untreated mental illness may impose higher costs on city, state, and local governments for law enforcement, county jails, social services, and homeless shelters.

Senate President Pro Tempore Darrell Steinberg (D – Sacramento) wrote the official ballot argument supporting Prop. 1E. Senator Steinberg also co-authored Proposition 63.

Senator Lou Correa (D – Santa Ana) wrote the official ballot argument against Prop. 1E.