California Prop 1

A new approach to mental health and homelessness

California Prop 1 (CA Prop 1) marks a significant shift in California’s approach to mental health and homelessness. The measure aims to address longstanding challenges faced by the state. Its passage has sparked both hope and controversy among various stakeholders. 

Understanding the implications of this CA Prop 1 is crucial for nonprofit leaders. It is also important for adapting to the changing landscape of mental health and housing services in California.

Background of CA Prop 1  

CA Prop 1 emerged from growing concerns about mental health care access and rising homelessness rates. Governor Gavin Newsom championed the measure as a comprehensive solution to these intertwined issues. 

It gained support from mayors of major cities like Los Angeles and San Francisco. Health organizations and law enforcement groups also backed it. These supporters saw the proposition as a necessary step to address the visible crisis on California’s streets.  

California faces a critical shortage of mental health treatment facilities. Over the past decades, the state has seen a significant decrease in acute care mental health hospital beds. Simultaneously, the state struggles with a large homeless population, estimated at over 180,000 people in 2022.  

CA Prop 1 attempts to tackle both issues simultaneously. It recognizes the often-overlapping nature of mental health challenges and homelessness.  

Main components of CA Prop 1  

To fully grasp the impact of CA Prop 1, it’s essential to understand its main components and their implications. 

Mental Health Services Act (MHSA) 

The proposition changes the usage of Mental Health Services Act (MHSA) funds. This act, passed in 2004, imposes a 1% tax on personal incomes over $1 million to fund mental health services. CA Prop 1 shifts some control from counties to the state, altering a longstanding balance in mental health service provision.  

$6.4 billion bond measure 

CA Prop 1 authorizes $6.4 billion in bonds, a significant investment in mental health infrastructure and housing. About $4.4 billion will fund mental health and substance abuse treatment facilities. This includes the construction of new facilities and the expansion or renovation of existing ones.  

Potential benefits of CA Prop 1  

Positive outcomes may include the following: 

• • Potential benefits of CA Prop 1 
  • Positive outcomes may include the following: 
  • Increased treatment capacity.  
  • Predicted to create over 11,000 new treatment beds and housing units. 
  • Could help thousands of Californians access needed care. 
  • Potentially reduce visible homelessness crisis in major urban areas 
  • Improved coordination between state and county services. 
  • Advocates believe this will lead to more efficient and effective care delivery. 
  • Seen as a comprehensive approach to complex issues. 
  • Addresses both immediate housing needs and underlying mental health challenges. 
  • Improvement in veterans’ housing. 
  • Over half of housing funds are marked for veterans. 
  • Could significantly address homelessness among this vulnerable population.

Implementation and timelines  

Implementation of CA Prop 1 will occur in stages. Changes to MHSA funding will take effect first. Construction of new facilities funded by bonds will follow. This process may face challenges and delays.  

Prop. 1 funding is rolling out quickly, with important considerations for cities and counties:  

• • The Department of Health Care Services will make applications available in July. Both nonprofit and for-profit hospitals will be eligible to apply.  
  • These grants apply to all types of facilities that serve people with behavioral health needs. Outpatient clinics and partial hospitalization programs for inpatient care and crisis stabilization will be eligible. There has yet to be an exact deadline. 
  • All applicants for funding must secure support from the county behavioral health director of the project’s location. This requirement ensures local coordination and alignment with existing services.  
  • Proposals should base their strategies on local behavioral health needs data. They must engage with the community and foster regional collaboration. This approach focuses on tailoring solutions to each community’s specific needs. It also encourages the development of comprehensive regional strategies.  
  • Under CA Prop 1, counties face new planning requirements. They must submit three-year comprehensive behavioral health services plans. These plans will include fiscal transparency and enhanced data reporting requirements. The state will release guidance for these plans in early 2025, with implementation set for July 2026.  

Analysis of fiscal impact  

The fiscal impact of CA Prop 1 is significant and multifaceted. It shifts about $140 million annually from counties to the state, altering the balance of mental health funding. Bond repayments will cost an estimated $310 million annually for 30 years, a substantial long-term commitment for the state budget. The following are some key points of its potential fiscal impact: 

• • Potential strain on county budgets:  
    • May affect existing mental health programs. 
    • Counties might need to find alternative funding or reprioritize services. 
  • Increased state responsibilities that may require additional administrative resources and expertise: 
    • New grant program oversight. 
    • Large-scale construction project coordination. 
    • Effective bond fund management. 
  • Long-term budget considerations:  
    • Decades-long financial commitment. 
    • Potential sustainability concerns given California’s cyclical budget challenges. 
  • Possible economic benefits:  
    • Potential long-term savings in emergency services, healthcare and law enforcement. 
    • Job creation in the construction and healthcare sectors. 
    • Potential boost to workforce productivity through improved mental health care.

Future outlook and potential outcomes  

In the short term, we can expect increased construction of treatment facilities and housing units. This activity will be visible in communities across California, potentially changing the physical landscape of some areas.  

Long-term projections suggest a potential decrease in homelessness and improved access to mental health care. The success of these outcomes will depend on effective implementation and coordination between state and local entities.  

How BPM can help with CA Prop 1    

CA Prop 1 significantly changes California’s mental health and homelessness approach. Nonprofits must adapt to new priorities and funding structures. BPM can help organizations face these changes with our knowledge of financial management and grant applications. We can assist by:  

• • Understanding the new funding landscape, such as changes to MHSA allocations and new bond-funded grant opportunities. 
  • Aligning your goals with new funding priorities. 
  • Preparing competitive grant applications for bond-funded projects. 
  • Helping ensure compliance with new regulations and reporting requirements. 
  • Optimizing financial management under the new system.

Additional BPM services to help you adapt to the changes brought by CA Prop 1 include:     

Outsourced Accounting Services 

We can manage your financial operations to help improve accuracy and meet compliance with new reporting requirements. This allows you to focus on your core mission. 

Data Analytics Services 

Our team can help you leverage data to make informed decisions. We’ll analyze your financial and operational data to identify trends and measure program effectiveness. We can help you provide evidence to support your grant applications. 

Technology Applications Services 

We can assist in implementing and optimizing technology solutions to streamline your operations. This includes systems for tracking grant expenditures, managing client data and generating required reports for Prop 1 funding.  

We offer tailored solutions for each nonprofit’s unique needs. We recognize that the impact of CA Prop 1 will vary depending on your organization’s size, focus and location. Our services can help organizations adapt and thrive under the new system. We’ll position you to take advantage of new opportunities while mitigating potential risks. To learn more, contact us.