Regular-Health & Human Services # 32.
Board of Supervisors
- Meeting Date:
- 03/03/2026
- Brief Title
- Behavioral Health Services Act (BHSA) Update
From:
Monica Morales, Director, Health and Human Services Agency
Staff Contact:
Tony Kildare, Behavioral Health Director, Health and Human Services Agency, x2929
Supervisorial District Impact:
Countywide
Subject
Receive Behavioral Health Services Act (BHSA) Integrated Plan updates relating to the Community Planning Process (CPP) and Program Budget Scenario options for Fiscal Year 2026-27 and request Board approval regarding budget approach for development of the required BHSA Integrated Plan. (No general fund impact) (Morales) (Est. Staff Presentation: 10 min)
Recommended Action
- Receive BHSA update on Community Planning Process and budget scenarios for Fiscal Year 2026-27.
- Approve BHSA budget approach and direct staff to develop the required BHSA Integrated Plan.
Strategic Plan Goal(s)
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Thriving Residents |
Reason for Recommended Action/Background
In March 2024, voters approved Proposition 1 to reform the Mental Health Services Act (MHSA) and replace it with the Behavioral Health Services Act (BHSA). It reforms behavioral health care funding to prioritize services for people with the most significant mental health needs while adding the treatment of substance use disorders (SUD), expanding housing interventions, increasing the behavioral health workforce, and accountability and transparency for county administered, publicly funded behavioral health programs. These reforms also significantly increase county responsibilities for planning, reporting, and stakeholder engagement. Proposition 1 changes the way in which Proposition 63 revenues are spent by county behavioral health plans and marks the transition from the "Mental Health Services Act (MHSA)" to the "Behavioral Health Services Act (BHSA)." The most notable aspects of this shift are:
- County allocations will be reduced from 95% to 90%
- Additional 5% (approx$1M) redirected to California Department of Public Health for Population level Prevention
- New BHSA Components (replaces MHSA CSS, PEI, and INN):
- Full-Service Partnerships (35%; FY 26-27 Projected Revenue $6.8M)
- Behavioral Health Services and Supports (35%; FY 26-27 Projected Revenue $6.8M)
- Housing Interventions (30%; FY 26-27 Projected Revenue $5.8M)
On January 27, 2026, HHSA leadership provided the Yolo County Board of Supervisors (BOS) with an update on the Proposition 1 Behavioral Health Services Act (BHSA) Integrated Plan (IP) process. The presentation outlined new program requirements and clarified BHSA budget allocation rules in advance of anticipated funding decisions in March. Local planning efforts must balance statutory compliance with BHSA's new funding structure amid ongoing financial uncertainty, program restructuring, and expanded planning and reporting requirements, while continuing to preserve services for vulnerable populations and ensure meaningful
community engagement. The BHSA presentation materials ( staff report & presentation) and recording for BOS item #24 are available to the community online. Several key considerations were highlighted:
community engagement. The BHSA presentation materials ( staff report & presentation) and recording for BOS item #24 are available to the community online. Several key considerations were highlighted:
- Projected FY 2026–27 revenue has increased from $16.8 million to $19.4 million.
- Projected fund balance of $12.4 million.
- Need to expand capacity for Medi-Cal billing.
- Approximately $5 million in funding shifts from mental health services to housing, combined with the restrictions of Behavioral Health Services & Supports (BHSS) categorical funding, are expected to result in a deficit of $2.3–$3.3 million.
- Addressing this deficit will require either substantial reductions to existing Non-Early Intervention programming (including crisis and treatment services) or reliance on fund balances.
Community Planning Process
BHSA includes Community Planning Process (CPP) requirements that have expanded, mandating robust stakeholder engagement with diverse populations, including consumers, family members, community partners, and underserved groups, along with clear documentation of how feedback is incorporated into planning, funding priorities, and program design. Counties are not required to conduct the full stakeholder engagement process for annual updates; this requirement applies only to the Three-Year Integrated Plan.
The Yolo County Behavioral Health Services Act (BHSA) FY 2026-2029 Behavioral Health Integrated Plan (BHIP) kickoff began Wednesday, September 10th with a Community Engagement Work Group (CEWG) meeting. The county has completed four (4) listening sessions, 35 key informant interviews, six (6) focus groups, and received 268 community survey responses. In total, the CPP engaged 514 community members through a combination of data collection efforts, informational sessions, and interviews to date. Attached is a community report-out including the Yolo County BHSA Community Planning Process Brief & Summary of Findings, as well as a corresponding one-pager. The full community planning findings will be included in the draft Integrated Plan which will be available for 30 days of public comment. The Summary of CPP findings includes the following key themes across all stakeholders:
Key Themes
BHSA includes Community Planning Process (CPP) requirements that have expanded, mandating robust stakeholder engagement with diverse populations, including consumers, family members, community partners, and underserved groups, along with clear documentation of how feedback is incorporated into planning, funding priorities, and program design. Counties are not required to conduct the full stakeholder engagement process for annual updates; this requirement applies only to the Three-Year Integrated Plan.
The Yolo County Behavioral Health Services Act (BHSA) FY 2026-2029 Behavioral Health Integrated Plan (BHIP) kickoff began Wednesday, September 10th with a Community Engagement Work Group (CEWG) meeting. The county has completed four (4) listening sessions, 35 key informant interviews, six (6) focus groups, and received 268 community survey responses. In total, the CPP engaged 514 community members through a combination of data collection efforts, informational sessions, and interviews to date. Attached is a community report-out including the Yolo County BHSA Community Planning Process Brief & Summary of Findings, as well as a corresponding one-pager. The full community planning findings will be included in the draft Integrated Plan which will be available for 30 days of public comment. The Summary of CPP findings includes the following key themes across all stakeholders:
Key Themes
- Fragmentation & Coordination: Information about services is scattered across multiple locations with no central access point. Communication gaps exist both between organizations and within county departments. Even providers report difficulty knowing where to refer clients, leading to duplicated efforts and missed opportunities to serve individuals.
- Housing as Foundation: Participants across all engagement methods emphasized that addressing behavioral health is difficult when individuals lack stable housing. Housing instability intersects with serious mental illness, substance use disorders, and justice involvement. The absence of transitional housing limits progression through care levels, and affordable housing shortages particularly affect populations with fixed incomes.
- Early Intervention Need: Families described feeling helpless while waiting for situations to escalate to crisis levels before accessing resources. The shift from MHSA's prevention focus raised concerns about losing early intervention capacity, particularly in underserved areas. Participants emphasized proactive approaches that respond to warning signs rather than waiting for crisis thresholds.
- Need for Cultural Responsiveness: Non-English-speaking populations face significant difficulties accessing therapeutic services due to insufficient multilingual provider capacity. Immigrant communities experience distrust of systems and fear related to immigration enforcement, leading to disengagement from services. Generational attitudes create stigma, particularly among older adults. Services designed without cultural input fail to effectively reach and serve diverse populations.
- Resource Constraints & Workforce Capacity: Provider shortages impact the ability to sustain services such as 24/7 crisis access. Budget deficits prevent adequate staffing to meet caseload demands. Grant-funded structures create instability when funding cycles end.
- Importance of Relationships and Trust: Despite systemic challenges, strong collaborative relationships and dedicated staff emerged as foundational strengths. Yolo County's manageable size facilitates relationship-building across sectors, creating an environment conducive to effective cross-sector collaboration. Staff demonstrate genuine care and commitment from leadership to frontline positions. This collaborative spirit and willingness to partner distinguishes Yolo County from larger systems. Participants emphasized that these established relationships, trust, and shared commitment to community wellbeing create opportunities to address fragmentation and build more integrated approaches to care.
Budget Considerations and Context
Comprehensive Financial Considerations for Behavioral Health Programming
Behavioral Health is experiencing significant financial challenges in FY2026-27 that include deficits in multiple funding sources, including:
Behavioral Health is experiencing significant financial challenges in FY2026-27 that include deficits in multiple funding sources, including:
- Behavioral Health Services Act (existing structural deficit)
- 1991 Mental Health Realignment
- 2011 Behavioral Health Realignment
- County General Fund
The combined deficits from these funding sources total $4,087,007. This figure is informed by the estimates in the FY2025-26 Adopted Budget and are preliminary. Unless alternative funding can be identified, these deficits may require Behavioral Health program reductions to achieve a balanced budget.
MHSA/BHSA Budget Background
On September 9, 2025, the Yolo County Board of Supervisors received a report from Yolo County HHSA that provided an update on the status of the projected $11.4 million structural deficit in the FY2025-26 MHSA budget. The Board was advised that the deficit had been reduced to approximately $4 million through administrative reductions that included: a transfer of the Full-Service Partnership (FSP) program (serving adults) from a contracted provider to internal staff; increased Medi-Cal revenue projections; salary and benefit allocation corrections; reductions in overhead costs; and other programmatic reductions. The board also directed staff to provide a runway for community-based organizations to ensure they had time to transition their programming.
On October 21, 2025, to address the MHSA deficit of approximately $4 million in FY2025-26, staff returned to the Board with a recommended budget approach that reduced funding to both County (reduction of $2.6 million) and contracted provider services (reduction of $1.4 million), and which allocated MHSA fund balance in the amount of $869,807 and additional funding sources, including Cannabis Revenue and Board Directed Project funds in the amount of $146,000 to reduce impacts to service levels allowing for the transition from MHSA to BHSA.
BHSA High-Level Year-to-Year Overview of Revenue and Expenditures (FY2025-27 & FY2026-27)
Based on updated increased revenue projections, the structural deficit has decreased to approximately $1.1 million. Below is a year-to-year overview of fiscal year revenues and expenditures:
FY2025-26
Revenue and expenditures
FY2026-27
Revenue and expenditures
Medi-Cal Billing Strategy
Billing Medi-Cal is vital for county behavioral health programs because it secures critical federal matching funds (referred to as "Federal Financial Participation" or "FFP"), providing the financial backbone for mental health and substance use services. Proper billing ensures financial sustainability, allows for program expansion, and supports reimbursement for services like crisis care and peer support, ultimately increasing access to care. While Yolo County has steadily increased Medi-Cal FFP generation (see chart below) over the past five fiscal years, there are systemic issues that are impairing the ability of the Agency to maximize this funding stream that need to be addressed. The Health & Human Services Agency is currently not capturing the full amount of eligible Medicaid (aka Medi-Cal in California) reimbursement due to limited billing capacity, staffing constraints, and lack of adequate infrastructure capacity (i.e. Quality Management, Review, EHR, Assurance and Improvement). As a result, the agency is leaving significant federal and state revenue unclaimed, which impacts our ability to sustain and expand essential services. As such, staff investments need to be made now to ensure we can generate revenue in the future.
BHSA Component Fiscal Summary FY2026-27
Previous revenue projections provided to the board anticipate revenue of $19.4M. The table below summarizes the projected BHSA Annual Revenue Allocations by component:
FY2026-27: BHSA funding categories are inclusive of administrative costs. Since the January 27, 2026, meeting, revised projections now reflect a $14.2 million fund balance.
BHSA Program Budget Scenarios FY 2026-27
There was previously identified a $2.3 - 3.3 million base deficit in BHSS. By shifts to programming, the structural deficit in BHSS has been reduced to approximately $1.1 million.
Scenario 1: "Status Quo" programming that assumes no increase to current (severely depleted) behavioral health workforce. Preserves fund balances for economic uncertainties. Least expensive program cost option (Program cost $19.4M).
Overview: Minimal structural deficit covered by fund transfer.
Overview: Structural deficit increase covered by fund balance and transfer
Scenario 3: Staff recommendation. Sustains current depleted behavioral health workforce, increases capacity to support permanent supportive housing commitments, and invests in capacity to increase Medi-Cal billing and other revenue to offset future costs and reduce structural deficits. (Program cost $21.7m).
Overview: Structural deficit increase offset by use of fund balance and funding transfers
Outlined below is the current timeline for the BHSA Integrated Plan:
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Background
For additional BHSA details, please refer to the Department of Health Care Services BHSA County Policy Manual, BHSA County Reporting timeline ( infographic), and informational MHSA vs BHSA funding overview.
MHSA/BHSA Budget Background
On September 9, 2025, the Yolo County Board of Supervisors received a report from Yolo County HHSA that provided an update on the status of the projected $11.4 million structural deficit in the FY2025-26 MHSA budget. The Board was advised that the deficit had been reduced to approximately $4 million through administrative reductions that included: a transfer of the Full-Service Partnership (FSP) program (serving adults) from a contracted provider to internal staff; increased Medi-Cal revenue projections; salary and benefit allocation corrections; reductions in overhead costs; and other programmatic reductions. The board also directed staff to provide a runway for community-based organizations to ensure they had time to transition their programming.
On October 21, 2025, to address the MHSA deficit of approximately $4 million in FY2025-26, staff returned to the Board with a recommended budget approach that reduced funding to both County (reduction of $2.6 million) and contracted provider services (reduction of $1.4 million), and which allocated MHSA fund balance in the amount of $869,807 and additional funding sources, including Cannabis Revenue and Board Directed Project funds in the amount of $146,000 to reduce impacts to service levels allowing for the transition from MHSA to BHSA.
BHSA High-Level Year-to-Year Overview of Revenue and Expenditures (FY2025-27 & FY2026-27)
Based on updated increased revenue projections, the structural deficit has decreased to approximately $1.1 million. Below is a year-to-year overview of fiscal year revenues and expenditures:
FY2025-26
Revenue and expenditures
$15M revenue, $26M projected expenditures (structural deficit: $11M)
$11M fund balance
ACTIONS TAKEN: Reduce expenditures by $11M; results:
$11M fund balance
$15M revenue, $15M projected expenditures (structural deficit: $0)
$11M fund balance carries over to FY 2026/27
Projected structural deficit of $5M for FY 2026/27 due to Housing Interventions and increasing costs
$11M fund balance carries over to FY 2026/27
Projected structural deficit of $5M for FY 2026/27 due to Housing Interventions and increasing costs
FY2026-27
Revenue and expenditures
$19.4M revenue, $20.5M projected expenditures (structural deficit: approx$1.1M)
$14.2M fund balance (this is an updated figure from $12.4M that was reported on January 27, 2026) Other BH funding deficits = $3 million
For FY 26-27, there is an approximately $4M Behavioral Health deficit, of which $1.1M is BHSA and $3M is other behavioral health funding deficits.
Medi-Cal Billing Strategy
Billing Medi-Cal is vital for county behavioral health programs because it secures critical federal matching funds (referred to as "Federal Financial Participation" or "FFP"), providing the financial backbone for mental health and substance use services. Proper billing ensures financial sustainability, allows for program expansion, and supports reimbursement for services like crisis care and peer support, ultimately increasing access to care. While Yolo County has steadily increased Medi-Cal FFP generation (see chart below) over the past five fiscal years, there are systemic issues that are impairing the ability of the Agency to maximize this funding stream that need to be addressed. The Health & Human Services Agency is currently not capturing the full amount of eligible Medicaid (aka Medi-Cal in California) reimbursement due to limited billing capacity, staffing constraints, and lack of adequate infrastructure capacity (i.e. Quality Management, Review, EHR, Assurance and Improvement). As a result, the agency is leaving significant federal and state revenue unclaimed, which impacts our ability to sustain and expand essential services. As such, staff investments need to be made now to ensure we can generate revenue in the future.
BHSA Component Fiscal Summary FY2026-27
Previous revenue projections provided to the board anticipate revenue of $19.4M. The table below summarizes the projected BHSA Annual Revenue Allocations by component:
FY2026-27: BHSA funding categories are inclusive of administrative costs. Since the January 27, 2026, meeting, revised projections now reflect a $14.2 million fund balance.
BHSA Program Budget Scenarios FY 2026-27
There was previously identified a $2.3 - 3.3 million base deficit in BHSS. By shifts to programming, the structural deficit in BHSS has been reduced to approximately $1.1 million.
Scenario 1: "Status Quo" programming that assumes no increase to current (severely depleted) behavioral health workforce. Preserves fund balances for economic uncertainties. Least expensive program cost option (Program cost $19.4M).
Overview: Minimal structural deficit covered by fund transfer.
- FSP: No adjustment to base.
- BHSS: Increase funding by $1.4M through a transfer of Housing Intervention funds to cover existing costs.
- Housing:
- Use of fund transfer to cover BHSS deficit: approx. 1.4M
- Capital development project: $1,118,270
- Reduce total plan expenditures from $20.5M (base) to $19.4M by spending $1.4 million less in housing (shift to BHSS).
- Preserve all of the fund balances for economic uncertainty over the next three years.
- Significant reduction in Behavioral Health. In this scenario, the County may not meet all the new programmatic mandates.
Overview: Structural deficit increase covered by fund balance and transfer
- FSP: No adjustment to base.
- BHSS: Increase spending by $1.8M over base and covering $1.1M deficit (through housing fund transfer).
- Housing:
- Use of fund transfer to $1.4M
- Capital development project: $1,118,270.
- Increase total plan expenditures from $20.5M (base) to $21.2M.
- Projected use of $1.8 million of fund balances annually. Over three-year BHSA Plan: approx.$6M (5% annual increase).
- Sustains current Behavioral Health programming.
Scenario 3: Staff recommendation. Sustains current depleted behavioral health workforce, increases capacity to support permanent supportive housing commitments, and invests in capacity to increase Medi-Cal billing and other revenue to offset future costs and reduce structural deficits. (Program cost $21.7m).
Overview: Structural deficit increase offset by use of fund balance and funding transfers
- FSP: Increase of approximately $375k to add 3 behavioral health case manager positions to support Permanent Supportive Housing (PSH) projects.
- BHSS: Increase spending by $2.25M over base
- Housing:
- Use of fund transfer $1.4M
- Capital development project: $1,118,270
- Increase total plan expenditures from $20.5M (base) to $21.8M.
- Projected use of $2.4 million of fund balances annually. Over three-year BHSA Plan: approx.$7.5M (5% annual increases).
- Sustains Behavioral Health programming, adds positions to support PSH, invests in infrastructure to increase revenue.
- Reliance on future revenue generation through Medi-Cal billing to offset future costs.
- Preservation of some degree of fund balance over three-year plan.
- Capital Development project in Housing (amount varies depending on funding transfer strategy).
- Build/allocate staff for housing intervention program (rental/operating subsidies).
- Significant investments in Early Intervention programming that serve target populations of BHSA, including preservation of existing CBO programs from FY25/26.
Outlined below is the current timeline for the BHSA Integrated Plan:
Background
For additional BHSA details, please refer to the Department of Health Care Services BHSA County Policy Manual, BHSA County Reporting timeline ( infographic), and informational MHSA vs BHSA funding overview.
Collaborations (including Board advisory groups and external partner agencies)
Local Behavioral Health Board
Fiscal Impact
No Fiscal Impact
Fiscal Impact (Expenditure)
- Total cost of recommended action:
- $
- Amount budgeted for expenditure:
- $
- Additional expenditure authority needed:
- $
- On-going commitment (annual cost):
- $
Source of Funds for this Expenditure
- General Fund
- $0
Attachments
- Att. A. Community Planning Process Summary
- Att. B. Community Planning Process One Pager
- Att. C. Presentation
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Tony Kildare | Tony Kildare | 02/23/2026 04:01 PM |
| Evis Morales | Evis Morales | 02/23/2026 07:05 PM |
| Tony Kildare | Tony Kildare | 02/24/2026 09:11 AM |
| Evis Morales | Evis Morales | 02/24/2026 09:33 AM |
| Laura Galindo | Laura Galindo | 02/24/2026 02:15 PM |
| Mark Bryan | Mark Bryan | 02/26/2026 10:12 AM |
| Laura Galindo | Laura Galindo | 02/26/2026 10:19 AM |
| Tony Kildare | Tony Kildare | 02/26/2026 02:24 PM |
| Mark Bryan | Mark Bryan | 02/26/2026 03:15 PM |
| Tony Kildare | Tony Kildare | 02/26/2026 03:43 PM |
- Form Started By:
- Jonathan Bartlett
- Started On:
- 01/09/2026 08:25 AM
- Final Approval Date:
- 02/26/2026