Behavioral Health Services Act fund allocations and governance
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Proposed amendments to Welfare and Institutions Code Section 5892 and new Section 5892.2 governing allocation, reserves, exemptions, planning, prioritized populations, and minimum expenditure methodology for Behavioral Health Services Fund distributions to California counties.
Specific percentage allocation requirements for counties: 30% for housing interventions, 35% for full-service partnerships, and 35% for other behavioral health services and supports.
Prudent reserve rules and maximum reserve caps (general cap 20%; <200,000 population cap 25%; temporary 2027-28 caps of 10% and 15%).
New county flexibility and exemption processes allowing State DHCS to approve exemptions from allocation requirements, with required 30-day decision timelines and collaboration with county associations.
Establishment of minimum expenditure methodology and multi-year minimum expenditure levels computed annually by DHCS (new Section 5892.2).
Prioritization of specific populations (chronically homeless, justice-involved, reentry, at risk of conservatorship/institutionalization; children/youth in juvenile justice or child welfare).
State-level set-asides and permissible uses prior to county allocations, including workforce initiative (minimum 3%), population-based prevention (minimum 4%), innovation fund cap ($20M annually for 2026-27 to 2030-31), and planning/operational caps (5% and up to 2%/4%).
Expanded and specified integrated plan and annual update content requirements, including budgets, alignment with statewide and local goals, workforce strategy, equity and access provisions, and multiple program categories to be included.
New reporting and metrics obligations: county annual County Behavioral Health Outcomes, Accountability, and Transparency Report with specified data elements and workforce metrics; department to establish metrics.
Enforcement authorities for the department including corrective action plans, monetary sanctions, and temporary withholding of payments for noncompliance, with sanctions deposited to a new Behavioral Health Services Act Accountability Fund.
Allocation, Planning, and Expenditure Criteria
County allocation and spending criteria
County allocation requirements for Behavioral Health Services Fund distributions. Counties must use distributed funds in the following proportions and follow reserve, transfer, and prioritization rules.
ALL of the following
ALL of the following
- Thirty percent of funds distributed to counties must be used for housing interventions programs pursuant to Part 3.2 (commencing with Section 5830).30% of county distribution
Counties subject to exemption process described below
- Of the housing interventions allocation, 50% must be used for housing interventions for persons who are chronically homeless, with a focus on those in encampments.50% of housing allocation
- No more than 25% of the housing interventions allocation may be used for capital development projects pursuant to paragraph (2) of subdivision (b) of Section 5830.<=25% of housing allocation for capital development
ALL of the following
- Thirty-five percent of funds distributed to counties must be used for full-service partnership programs pursuant to Part 4.1 (commencing with Section 5887).35% of county distribution
- Housing interventions provided to individuals enrolled in full-service partnership programs shall be funded from the housing interventions allocation (the 30% allocation).
Ensures housing costs for FSP enrollees come from housing allocation
ALL of the following
- Thirty-five percent of funds distributed to counties must be used for other Behavioral Health Services and Supports, including children's system of care services (Part 4), adult and older adult system of care services (Part 3), early intervention programs (Part 3.6), outreach and engagement, workforce education and training, capital facilities and technological needs, and innovative behavioral health pilots and projects.35% of county distribution
- At least 51% of this 'Behavioral Health Services and Supports' funding must be utilized for early intervention programs.>=51% of other services allocation to early intervention
- At least 51% of the early intervention funds must serve individuals 25 years of age and younger.>=51% of early intervention funds to <=25-year-olds
ALL of the following
- Programs funded under these allocations must prioritize specified populations including persons who are chronically homeless, justice-involved individuals, those reentering from incarceration or youth facilities, people at risk of conservatorship or institutionalization, and children and youth involved in juvenile justice or child welfare.
ALL of the following
- Counties may maintain a local prudent reserve into which they may deposit Behavioral Health Services Fund revenues; the general maximum average prudent reserve cap is 20%.max 20% average prudent reserve
- For counties with population less than 200,000, the maximum average prudent reserve cap is 25%.max 25% for <200,000 population
- Temporary prudent reserve caps for 2027-28 may be set at 10% (general) and 15% for counties <200,000, per the statutory temporary provisions.10% / 15% temporary caps (2027-28)
- Unspent funds revert on a schedule: general reversion after 3 years (longer 10-year reversion for capital, technology, and training investments); counties with population under 200,000 revert after 5 years. The Controller may offset monthly distributions to recover reverted funds and DHCS may withhold distributions per audit or monitoring findings.
ALL of the following
- Counties may request transfers or shifts of funding between the defined purposes, subject to limits (up to a 14% shift between purposes overall and not decreasing any single purpose by more than 7%).
State approval required; see approval and exemption process
- Requests to shift funding allocations require submission in the form and manner prescribed; the Department must respond (approve or deny) within 30 days of receipt or the request is deemed approved.
Operational submission and 30-day statutory response timeline
ALL of the following
- The Department of Health Care Services will compute and publish county-specific minimum expenditure levels covering three fiscal years; counties must spend at or above the calculated minimum expenditure level commencing with fiscal year 2029-30.three-year minimums; binding from 2029-30
- DHCS shall publish revised minimum expenditure levels if the revised level is lower by 10 percent or more compared to a previously published level; counties must meet revised levels when published.publish revision if >=10% lower
- The minimum expenditure methodology and publication schedule are operative July 1, 2028.
Operative date for Section 5892.2
ALL of the following
- State may set aside funds prior to county allocation for workforce initiatives (minimum 3%) and population-based prevention (minimum 4%), and may deposit up to $20,000,000 annually into an Innovation Partnership Fund for 2026-27 through 2030-31, subject to appropriations and consultation.
ALL of the following
- Commencing with the 2026-29 county integrated plan cycle, counties with population less than 200,000 may request an exemption from the housing allocation requirement; DHCS shall establish criteria and a process and shall collaborate with county associations to ensure reasonable criteria and a timely process. Requests must be approved or denied within 30 days or are deemed approved.
May expand statewide for 2032-35 cycle per statutory language
Integrated Plan, Budgeting, Reporting, and Expenditure Requirements
Required integrated plan, annual update, budgeting, workforce and reporting requirements for counties receiving Behavioral Health Services Fund distributions.
ALL of the following
- Each county shall prepare and submit an integrated plan and annual updates to the Behavioral Health Services Oversight and Accountability Commission and the Department; the county board of supervisors shall approve the plan and updates by June 30 prior to the fiscal year(s) covered.
- The integrated plan and updates must be submitted in the form and manner prescribed by the Department and the Department will post plans online.
ALL of the following
- Describe programs and services funded by federal, state, and local sources, including community mental health services, Behavioral Health Services Fund–funded programs, Substance Abuse Block Grant programs, Projects for Assistance in Transition from Homelessness, opioid settlement distributions, and other federal or county programs.
- Include a budget that shows county planned expenditures and reserves for Behavioral Health Services Fund distributions and other funds that support the listed programs, including proposed adjustments required by statute.
- Provide a description of how the integrated plan aligns with statewide behavioral health goals and outcome measures (including disparity‑reduction goals) and with local goals and outcome measures for behavioral health.
- Describe how the county will address unique needs of specific populations (LGBTQ+ youth, justice‑involved youth, child welfare‑involved youth, justice‑involved adults, older adults) in housing intervention and Full Service Partnership programs.
ALL of the following
- Include a workforce strategy describing actions to ensure county and contracted behavioral health workforce is well‑supported, culturally and linguistically concordant, and sufficient to achieve statewide and local goals.
- Describe plans to maintain and monitor a network of high‑quality, culturally and linguistically concordant county and noncounty contracted providers sufficient to provide adequate access to services and supports.
- Describe measures to meet federal and state standards for timely access to care, ensure health and welfare of individuals, promote community integration, and provide accommodations and accessible equipment for individuals with disabilities.
ALL of the following
- County behavioral health director and county chief administrative officer must provide certifications regarding legal compliance and fiscal accountability for the integrated plan and updates.
- Board of supervisors must attest to report completeness and accuracy before submission; the Department will post a statewide report annually.
ALL of the following
- Annually submit a County Behavioral Health Outcomes, Accountability, and Transparency Report containing specified data elements including allocations, expenditures, unspent funds, nonfederal share, administrative costs, contracted services, services to non‑Medi‑Cal persons, and workforce vacancy and other workforce metrics as specified by the Department.
- The Department will establish additional metrics and require the specified reporting elements; failure to submit or meet reporting requirements may trigger enforcement actions.
ALL of the following
- The Department may require plan revisions, impose corrective action plans, assess monetary sanctions, temporarily withhold payments from the Behavioral Health Services Fund, and require other remedial actions for noncompliance including missing required data, failing to allocate or expend funds according to requirements, or failing to meet required metrics.
- Monetary sanctions must be deposited to the Behavioral Health Services Act Accountability Fund and withheld funds will be returned to counties upon compliance.
ALL of the following
- The Department may implement or interpret these provisions via plans, county letters, information notices, plan or provider bulletins, or similar instructions without further regulatory action.
ALL of the following
- DHCS will compute and publish minimum expenditure levels by county covering three fiscal years; counties must spend at or above the calculated minimum expenditure level commencing with fiscal year 2029-30, subject to limited prudent reserve use under specified conditions.
- DHCS will publish revised minimum expenditure levels if a revised level is lower by 10% or more than a previously published level; counties must meet published revised levels when issued.
County and Provider Submission, Exemptions, and Enforcement Actions
County funding shift approval process — submit request to DHCS in prescribed form and timeline
After completing the required integrated planning and local stakeholder consultation (Sections 5963.02 and 5963.03), counties must submit any request to shift Behavioral Health Services Fund allocation percentages to the State Department of Health Care Services in the form, manner, and timelines prescribed by DHCS. Counties must provide any additional information, records, or reports DHCS deems necessary; DHCS will review requests based on compliance with allocation requirements and demonstration that the shift is responsive to local priorities. DHCS must respond, approving or denying the request within 30 days of receipt, or the request is deemed approved.
- Submit request after fulfilling integrated plan and local stakeholder consultation requirements (Sections 5963.02 and 5963.03).
- Submit in form, manner, and timelines prescribed by DHCS and provide any information DHCS deems necessary.
- DHCS will review for compliance with allocation paragraphs and responsiveness to local priorities using local data and community input.
- DHCS must approve or deny within 30 days of receipt or the request is deemed approved.
Exemption request process — DHCS-established process with 30‑day decision timeline
DHCS may establish an exemption approval process allowing counties to request exemptions from the housing allocation requirement; initially this process applies to counties with population under 200,000 and may be expanded statewide beginning with the 2032–35 integrated plan. DHCS will collaborate with county associations on reasonable criteria and must approve or deny exemption requests within 30 days of receipt (otherwise they are deemed approved).
- Exemption process established commencing with 2026–29 integrated plan for counties <200,000 population.
- DHCS will collaborate with the California State Association of Counties and the County Behavioral Health Directors Association on criteria and an efficient exemption process.
- Commencing with 2032–35 integrated plan, DHCS may apply the exemption process regardless of county population size.
- Requests must be responded to, approved, or denied within 30 days of receipt or are deemed approved.
Enforcement and remedial actions — corrective plans, sanctions, and withholding of payments
If DHCS determines a county or Medi‑Cal behavioral health delivery system fails to meet required submissions, allocations, expenditure requirements, planning processes, or established metrics, the department may impose corrective action plans, monetary sanctions, temporarily withhold payments from the Behavioral Health Services Fund, and require plan revisions. Monetary sanctions are deposited into the newly created Behavioral Health Services Act Accountability Fund and withheld funds will be released when DHCS determines the entity has come into compliance.
- DHCS may impose corrective action plans, monetary sanctions, or temporarily withhold payments pursuant to Section 14197.7 for failures such as missing required data, not allocating or expending funds per requirements, or not following required processes.
- Temporarily withheld payments shall be withheld from the Behavioral Health Services Fund and DHCS may withhold amounts necessary to secure compliance; withheld funds will be released upon DHCS determination of compliance.
- Monetary sanctions collected are deposited in the Behavioral Health Services Act Accountability Fund and may be allocated and distributed back to the county that paid the sanction once the county comes into compliance.
Publication Thresholds and Minimum Expenditure Notices
Key Definitions
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