Approve the Mental Health Services Act (MHSA) fiscal year 2025-26 Annual Update plan. (No general fund impact) (Morales) (Est. Staff Presentation: 10 min)

Approve the Mental Health Services Act (MHSA) fiscal year 2025-26 Annual Update plan.

Background
The Mental Health Services Act, passed in 2004 as Proposition 63, provides for a 1% tax on personal incomes over $1 million. This revenue is divided by a State formula and distributed directly to counties to expand and transform the mental health system while meeting the needs of unserved or underserved consumers. On a triennial basis, each county is required to submit a program and expenditure plan for use of these funds, followed by two annual updates to the plan. HHSA is submitting this MHSA Annual Update to account for fiscal year (FY) 2025-2026. This will be the final Annual Update of the current three-year MHSA planning cycle and marks the end of the current MHSA categorical funding requirements.

The Yolo County Health and Human Services Agency (HHSA) began the Community Program Planning (CPP) process for its Mental Health Services Act (MHSA) FY 2025-2026 Annual Update in February 2025. This process included two listening sessions, online community surveys, five key informant interviews, and two community engagement work groups. In total, the CPPP engaged 236 community members through a combination of data collection efforts and informational sessions.

In collaboration with county leadership and local stakeholders, this Annual Update prioritizes 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 related to Proposition 1. Yolo County will continue to monitor state projections and make any necessary additional adjustments in transition to the Behavioral Health Services Act (BHSA) Integrated Plan.

To address an MHSA deficit of approximately $4 million in FY 2025-2026, staff recommended a budget approach that reduces funding to both County and community organizations, and which allocates MHSA fund balance and additional funding sources to reduce impacts to service levels. As such, staff recommended Scenario 2 based on the directive from the board to preserve some of the fund balance to address future deficits and provide a runway for community organizations. This scenario would reduce the FY 2025-2026 MHSA Budget by $3,908,310, which would add to the MHSA fund balance. This approach carries a potential impact of 5.0 to 10.0 FTE.
                                                                                                                                      
On October 21, 2025, HHSA staff received Board direction to address the MHSA deficit of approximately $4 million in FY 2025-2026, utilizing a budget approach that reduces funding to both County and contracted provider services, and which allocates MHSA fund balance and additional funding sources to reduce impacts to service levels. The Board approved staff recommendation funding scenario 2 to address the MHSA deficit in FY 2025-2026 ($4 million) as follows:

Community planning priorities highlighted the need to adapt to changes stemming from Proposition 1, enhance FSP program needs, and expand supportive housing options. Feedback from the community planning process has consistently underscored the importance of maintaining existing services.

PRIORITIZED PROGRAMS IN FY 2025-2026 ANNUAL UPDATE

Community Services and Supports (CSS)

Prevention and Early Intervention (PEI)

The FY 2025-2026 updates are informed by the community planning process, prioritize fiscal responsibility, and are guided by key principles, which include: Ensuring compliance with MHSA categorical spending requirements; Minimizing impacts on service delivery while prioritizing direct client services; Maximizing Medi-Cal revenue by leveraging MHSA funding for federal entitlements related to Medi-Cal Specialty Mental Health Services; and 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.

On October 31, 2025, the Draft MHSA Annual Update FY 2025-2026 posted on the MHSA page of the Yolo County website, at www.yolocounty.gov/mhsa. This draft was available for public comment through Saturday, November 29, 2025.  The County announced and disseminated the draft Annual Update broadly through community stakeholders, the general public, the Community Engagement Work Group, MHSA listservs, service providers, consumers and family members, Board of Supervisors, Local Mental Health Board, county staff, and requested and encouraged partners and community stakeholders to promote the review of the draft plan and participation by posting and sharing with others. This outreach built off the extensive Three-Year Program Community Planning Process connecting the MHSA program to a broad array of stakeholders and including them on all subsequent notifications. Public Notices were also posted in the Davis Enterprise and the Daily Democrat newspapers for several dates. The draft was posted to the County’s MHSA website and could be downloaded electronically. Paper copies were also made available at HHSA locations in Woodland, Winters, Davis, and West Sacramento within Yolo County. Any interested party could request a copy of the draft by submitting a written or verbal request to the MHSA program staff. A Public Hearing regarding the Draft Annual Update is scheduled to be held by the Yolo County Local Behavioral Health Board on Wednesday December 3, 2025, at 6:00 PM.

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.

Staff is seeking approval from the Board on the final Mental Health Services Act (MHSA) FY 2025-2026 Annual Update plan.

Local Behavioral Health Board