Receive initial presentation on the Three-Year MHSA Plan Update and provide related feedback to staff. (No general fund impact) (Sullivan) (Est. Time: 20 min)

The Fiscal Year (FY) 2024-25 Annual Update for the Mental Health Services Act (MHSA) provides the Yolo County Health and Human Services Agency (HHSA) an opportunity to inform stakeholders, partners, consumers, and community members about MHSA-funded programs and funding priorities and highlight outcomes from FY 2022-23. This is an initial presentation and staff expect to return on December 10, 2024, with the final Update for Board approval.

California's public behavioral health system is set for significant transformation following the passage of Proposition 1, the Behavioral Health Services Act (BHSA). The BHSA changes the MHSA to increase its focus on those with serious mental illnesses and substance use disorders, including by emphasizing housing support for the unhoused as well as full-service partnerships and early intervention services. Key changes under the BHSA will take effect in July 2026, restructuring funding allocations to prioritize housing (30%), full-service partnerships (35%), and behavioral health services and supports (35%). Additionally, the BHSA eliminates funding for prevention and workforce training at the local level, removes the innovation component, and increases the state's funding share from 5% to 10%, redirecting approximately $140 million annually from counties to the state. Efforts are underway to assess the local impact of these changes and identify new opportunities to effectively address local behavioral health challenges.

As of January 2024, state projections indicated a 23.6% decline in MHSA revenue compared to March 2023, leading to reduced revenue projections for Yolo County during the current Three-Year Plan. The volatility of MHSA revenue is evident, with actual revenue over the past three fiscal years being 20% lower than projected, resulting in a $12.4 million shortfall. This fluctuation, combined with rising costs and prior growth plans, has depleted Yolo County’s unspent fund balances.

In collaboration with County leadership and local stakeholders, this Annual Update sustains much of the core programming within Yolo County’s MHSA Three-Year Plan and includes reductions in the Community Services and Supports (CSS) budget and adjustments in the Prevention and Early Intervention (PEI) budget. These changes reflect updated state projections, actual local revenue and expenditures and related impacts to fund balances, and anticipated impacts from the BHSA. Yolo County will continue to monitor state projections and make any necessary additional adjustments in the FY 2025-26 Annual Update.

The FY 2024-25 updates are informed by the community planning process, prioritize fiscal responsibility, and are guided by key principles, which include: (1) ensuring compliance with MHSA categorical spending requirements; (2) minimizing impacts on service delivery while prioritizing direct client services; (3) maximizing Medi-Cal revenue by leveraging MHSA funding for federal entitlements related to Medi-Cal Specialty Mental Health Services; (4) evaluating the eligibility of current MHSA programs for continued funding post-BHSA implementation; and (5) utilizing data-driven decision-making to "right-size" Yolo County’s plan and budget based on changing MHSA revenue projections. These adjustments will result in minimal and targeted reductions to existing services, with a focus on maximizing Medi-Cal revenue and leveraging alternative funding sources wherever possible. The only new MHSA initiative for FY 2024-25 is one-time capital funding for the acquisition and rehabilitation of an MHSA-funded Adult Residential Facility (Pine Tree Gardens West, approved by the Board of Supervisors in mid-2024) serving seriously mentally ill adults.

Changes for the FY 2024-25 Annual Update include:

Community planning priorities have highlighted the need to adapt to changes stemming from the BHSA, enhance FSP program needs, and expand supportive housing options. Feedback from the community planning process has consistently underscored the importance of strengthening existing services. As we navigate these transitions and the evolving landscape of behavioral health in California, Yolo County HHSA remains committed to supporting our clients, partners, and the community. We will embrace new opportunities and uphold the core values of the MHSA: community collaboration, cultural competence, consumer and family-driven services, service integration, prioritization of the unserved and underserved, and a focus on mental wellness, recovery, and resilience.

Next steps in the 24/25 MHSA Annual Update Process include;