NAMI California Response to Governor Newsom’s 2020-2021 Budget

Governor Gavin Newsom has released his most ambitious budget to date, showing that he and his Administration aim to make sweeping improvements to behavioral health across the state. 

“We are happy to see a solid priority on mental health that focuses on a multi-pronged approach to solving a complex issue,” says CEO Jessica Cruz. “It is clear the Governor and his Administration are prioritizing mental health, from plans to establish a new ‘Behavioral Health Task Force’ and improve the enforcement of behavioral health parity laws, to investing in state hospitals and establishing a new ‘Healthcare Rights and Access Section’ at the California Department of Justice.”

Several new behavioral health initiatives outlined in the budget include:

  • Establishing a new “Behavioral Health Task Force” at the California Health and Human Services Agency
  • Establishing a new “Behavioral Health Quality Improvement Program”
  • Strengthening and updating the California Department of Managed Health Care enforcement of behavioral health parity laws
  • Establishing a new “Healthcare Rights and Access Section” at the California Department of Justice
  • Proposing reforms to the Mental Health Services Act (MHSA) to address spending for substance use disorder treatment, people with mental illness who are also experiencing homelessness or are involved in the criminal justice, and early intervention for youth

Also in the works, investments are being made available for: 

  • State mental health hospitals
  • The Medi-Cal “Healthier California for All” Initiative [formerly named the California Advancing and Innovating Medi-Cal initiative (CalAIM)
  • New “Access to Housing and Services Fund” to tackle homelessness
  • State prison supports for behavioral health
  • Early childhood, student well-being, and addressing adverse childhood experiences
  • Making health care more affordable
  • Increases to the In-Home Supportive Services (IHSS) Program for aged, blind, and disabled individuals to remain safely in their homes rather than institutions
  • Nursing home reimbursement reform
  • Small increases to Supplemental Security Income (SSI)/State Supplementary Payment (SSP) benefits
  • Addressing individuals with both behavioral health and developmental disability needs
  • New State Department of Youth and Community Restoration

We are looking forward to continuing to advocate for the family and individual’s voice in the development and implementation of these policies. We will work with the legislature, department of finance and state departments, including the Governor’s office, on being a part of the solution that is best for families across California.

NAMI California Budget Review

Our more comprehensive summary of the budget is below.

The Big Picture

The Governor’s Budget describes California’s economy as the strongest in the nation, which has contributed to fueling the nation’s economy. Despite the strong economy, low unemployment rate (3.9%) and healthy projected reserves ($18 billion in the Rainy Day Fund in 2020-21), Governor Newsom wants to ensure the state can weather a recession. In the immediate future, the Budget projects state revenue growth will slow over the next four years.

Behavioral Health is Prioritized in New Initiatives

Governor Newsom and his Administration aim to improve behavioral health in California through varying complimentary approaches. The Governor’s Budget proposes the following new behavioral health initiatives:

  • Establish a new “Behavioral Health Task Force” at the California Health and Human Services Agency comprised of state agencies, counties, consumers, health plans, providers, and other stakeholders. According to the Governor’s Budget, the task force will “review existing policies and programs to improve the quality of care, and coordinate system transformation efforts to better prevent and respond to the impacts of mental illness and substance use disorders in California’s communities.”
  • Establish a new “Behavioral Health Quality Improvement Program” with $45.1 million General Fund in FY 2020-21 and $42 million General Fund in FY 2021-22. This would fund county-operated community mental health and substance use disorder systems to “incentivize system changes and process improvements that will help counties prepare for opportunities through the Medi-Cal Healthier California for All initiative. Improvements include enhanced data-sharing capability for care coordination and establishing the foundational elements of value-based payment such as data collection, performance measurement, and reporting. These core investments build off the $70 million in the 2019 Budget Act to provide value-based provider payments for services and projects focused on behavioral health integration.
  • Strengthen and update the California Department of Managed Health Care enforcement of behavioral health parity laws by working with health plans, providers, patient representatives, and others to address timely access to treatment, network adequacy, benefit design, and plan policies. The May Revise will include updates to this proposal.
  • Establish a new “Healthcare Rights and Access Section” at the California Department of Justice to consolidate and centralize and managing the increasing volume of healthcare litigation regarding the opioid crisis, drug price-fixing, antitrust cases, and defenses of the Affordable Care Act.
  • Propose reforms to the Mental Health Services Act (MHSA) to address spending for substance use disorder treatment, people with mental illness who are also experiencing homelessness or are involved in the criminal justice, and early intervention for youth. The Budget reports that counties currently have slightly more than $500 million in local MHSA reserves, of which $161 million must be shifted to prevention and community services and supports by June 30, 2020. The May Revise will include a proposal for proposed reforms.

The Medi-Cal “Healthier California for All” Initiative

The Governor’s Budget provides new information and announcements about the “Medi-Cal Healthier California for All” initiative (formerly CalAIM, the California Advancing and Innovating Medi-Cal initiative). The Medi-Cal Healthier California for All initiative is intended to improve Medi-Cal beneficiaries’ clinical outcomes, assist beneficiaries with navigating the complex health system, and better coordinate between and integrate delivery systems. The initiative also builds upon recent Medi-Cal demonstration programs, including Whole Person Care pilots, the Coordinated Care Initiative, the Health Homes program, and public hospital system delivery transformation.

To implement the Medi-Cal Healthier California for All initiative starting January 1, 2021, the Budget provides $348 million General Fund. The investment would grow to $695 million in FYs 2021-22 and 2022-23. These funds would be used for enhanced care management, in lieu of services, necessary infrastructure to expand whole person care approaches statewide, and to build upon various dental initiatives. Beginning in FY 2023-24, the Administration projects ongoing annual costs of $395 million. For additional information, please see my November 6, 2019 memo describing CalAIM components pertaining to behavioral health.

State Mental Health Hospitals

The Department of State Hospitals (DSH) are proposed to receive $2 billion in 2020-21 and the patient population is expected to reach 6,761 by the end of 2020-21. Select state hospital investments of interest proposed in the Budget include:

  • Establish a Community Care Collaborative Pilot Program to address the growing number of incompetent to stand trial (IST) commitments awaiting admission to the state hospital system. The number of ISTs with felony criminal charges awaiting state hospital admission was approximately 800 individuals in December 2019. The pilot program would receive $24.6 million General Fund in FY 2020-21 for a six-year pilot to incentivize three counties to treat and serve individuals deemed IST in the community. Over six years, the cost of the pilot program is estimated to be $364.2 million General Fund;
  • Expand the existing Jail-Based Competency Treatment program to eight additional counties with $8.9 million General Fund in 2020-21 and $11.2 million General Fund annually thereafter; and
  • Improve clinical care through $32 million General Fund and 80 positions for the first year of a five-year effort to standardize clinician-to-patient ratios, improve patient outcomes, shorten lengths of stay, reduce patient violence and staff injuries, implement trauma-informed care, and develop of a comprehensive discharge planning program.

New “Access to Housing and Services Fund” to Tackle Homelessness

According to the Budget, the Administration proposes a “radical shift in the state’s involvement to augment local governments’ efforts to shelter the many unsheltered persons living in California, by

launching a new state fund for developing additional affordable housing units, supplementing and augmenting rental and operating subsidies, and stabilizing board and care homes.

The Budget would establish a new “Access to Housing and Services Fund” (administered by the California Department of Social Services) with $750 million General Fund to move individuals and families into stable housing, and to increase the number of units available as a stable housing option for individuals and families who are homeless or at risk of becoming homeless. The funds would be provided under contract with regional administrators and would be used to:

  • Provide short- and long-term rental subsidies;
  • Make small and medium-sized contributions to encourage development of new units in exchange for a rental credit;
  •  Stabilize board and care facilities by funding capital projects and/or operating subsidies;
  • Engage with landlords to secure units and negotiate individual client leases;
  • Provide tenancy support services;
  • Coordinate case management with counties for those receiving rental subsidies to ensure they are enrolled in eligible public assistance programs; and
  • Enable regional partners to pool federal, state, local, and private funds to stabilize the housing circumstances of the state’s most vulnerable populations.

State Prison Supports for Behavioral Health

The Budget provides resource to the California Department of Corrections and Rehabilitation (CDCR) for a variety of efforts to address behavioral health needs of individuals in its care. The average daily adult inmate population is now projected to be 124,655 in 2019-20, and an average daily adult parolee population of 50,442. Budget proposals of interest include:

  • Expand telepsychiatry to increase inmate access to mental health care services ($5.9 million);
  • Expand inmate visitation at nine CDCR institutions to establish and maintain a continuum of social support, including parent-child relationships, which are critical for successful reentry ($4.6 million General Fund);
  • Retrofit 64 cells for inmates entering segregated housing at institutions around the state to prevent suicide ($3.8 million);
  • Maintain mental health, medical, and dental care services programs ($3.6 billion);
  • Support an electronic health care data exchange process to transfer health records to counties for inmates who are transitioning to county custody or the community ($720,000)

Early Childhood, Student Well-Being, and Addressing Adverse Childhood Experiences

According to the Budget, “Providing children in California with a healthy start is one of the best investments the state can make. A growing body of research points to the link between early

childhood interventions and improved outcomes years or even decades into the future, including higher education levels, better health, and stronger career opportunities.” Specific investments of interest include:

  • $10 million for the development of an adverse childhood experiences (ACES) cross-sector training program that will be accredited by the Office of the Surgeon General, as well as a statewide ACES public awareness campaign;
  • $300 million for the development of innovative community school models that support student mental health in public schools;
  • $350 million to augment Educator Workforce Investment Grants for local educational agencies to train school teachers and paraprofessionals on a host of issues, including multi-tiered systems of support and mental health interventions: social-emotional learning and restorative practices; non-discrimination, anti-bullying, and affirmative supports for LGBTQ and other marginalized students.
  • $18 million for the California Collaborative for Educational Excellence to bolster awareness of available services and supports for all local educational agencies in the topics listed above.

Additionally, to improve local educational agencies’ ability to effectively support students with

Disabilities and identify best practices, the Administration and Legislature engaged with researchers and collaborated with stakeholders. Among their findings are that “Needs associated with student mental health and social-emotional issues are becoming more prevalent.” In response, the Budget proposes a three-phase, multi-year process to improve special education finance, services, and student outcomes. This process will finalize a new special education funding formula to support equity, more inclusive practices, and early intervention services; improve family and student engagement, including whole-child and family wrap-around services; and refining funding, accountability, and service delivery for specialized services, such as out-of-home placements, non-public school placements.

Making Health Care More Affordable

Governor Newsom reports his Administration will pursue new initiatives this year to make health care more affordable. For example, he proposes to increase transparency in the price for health care, address hospitals’ costs on a regional basis, increase use of technology, and expand value-based reimbursements. Additionally, the Budget seeks to reduce prescription drug costs by expanding the state’s ability to consider the best prices offered by manufacturers internationally, negotiating additional supplemental rebates, and increasing the state’s purchasing program to further consolidate the state’s purchasing power. The Governor plans to propose a single market for drug pricing within the state and the state’s own generic drug label, as well as to establish a new “Office of Health Care Affordability.” Additionally, to strengthen California’s public option for health plan selection, the Administration plans to “leverage” Covered California (the health care exchange) and Medi-Cal. The California Health and Human Services Agency plans to identify options that would address enrollment, affordability, and choice through Covered California, as well as utilize existing Medi-Cal managed care plans.

Increases to the In-Home Supportive Services (IHSS) Program

The IHSS program is a Medicaid entitlement that provides domestic and related services to enable aged, blind, and disabled individuals to remain safely in their homes rather than institutions. The Governor’s Budget includes $5.2 billion General Fund for IHSS in FY 2020-21, representing a 16% increase from 2019-20. The Budget estimates that over half a million (586,000) Californians will receive IHSS services in FY 2020-21. Additionally, the Budget provides $523.8 million General Fund to provide planned minimum wage increases to IHSS works ($13 per hour on January 1, 2020, $14 per hour on January 1, 2021).

The Budget also provides $1.9 million General Fund in 2020-21 to providing additional training to county social workers and managers in conducting needs assessments for IHSS recipients, with the goal of improving consistency across counties in implementing IHSS program requirements.

Nursing Home Reimbursement Reform

Currently, the state provides annual cost-based increases and quality incentive payments to all skilled nursing facilities (SNFs) that are partly funded by facilities paying a fee of 6% of their revenue. These fees are then used as state match to draw down federal Medicaid reimbursement for SNF services to Medi-Cal beneficiaries. This type of arrangement began in 2004, but sunsets July 31, 2020. The Governor proposes to reform SNF reimbursement to a cost-based methodology that could better incentivize value and quality.

It is important to note that this funding arrangement does not include SNFs that are considered Institutions for Mental Disease (IMDs), as SNF-IMDs are ineligible for federal Medicaid reimbursement. As such, county mental health departments utilize 1991 Realignment Mental Health revenues to cover the full costs of SNF-IMDs. Under current law, counties must pay SNF-IMDs an annual 3.5% rate increase.

Small Increases to Supplemental Security Income (SSI)/State Supplementary Payment (SSP) Benefits Starting Next Year

As described in the Budget, the federal SSI program “provides a monthly cash benefit to eligible aged, blind, and disabled persons who meet the program’s income and resource requirements. In California, the SSI payment is augmented with an SSP grant. These cash grants assist recipients with basic needs and living expenses…The state-only Cash Assistance Program for Immigrants (CAPI) provides monthly cash benefits to aged, blind, and disabled legal noncitizens who are ineligible for SSI/SSP due solely to their immigration status.” Due to a 1.7% increase in the Consumer Price Index, the maximum SSI/SSP monthly grant levels will increase January 1, 2021 by approximately $13 for individuals and $20 for couples. The Budget provides $2.6 billion General Fund in FY 2020-21 for the SSI/SSP program (a 1.6% decrease from the current year due to lower caseload projections). Current maximum SSI/SSP grant levels are $943 per month for individuals and $1,583 per month for couples.

Addressing Individuals with Both Behavioral Health and Developmental Disability Needs

According to the Budget, the composition of regional center consumers living with developmental disabilities has significantly changed over the past decade. Specifically, behavioral health needs among regional center consumers have grown by 48%. The Budget includes $2.6 million General Fund for “Systemic, Therapeutic, Assessment, Resources and Treatment Training” on person-centered, trauma-informed, and evidence-based support services for individuals with co-occurring developmental disabilities and mental health needs.

New State Department of Youth and Community Restoration

The 2019 Budget transitioned the Division of Juvenile Justice at the Department of Corrections and Rehabilitation (CDCR) to the Health and Human Services Agency as an independent department, effective July 1, 2020. The Governor’s 2020-21 Budget includes additional resources to establish the division as a new “Department of Youth and Community Restoration.” The new department will consist of over 1,400 personnel and would be supported by $260.8 million General Fund in 2020-21. According to the budget, this transition “aligns with the rehabilitative mission and core values of the Agency by providing trauma-informed and developmentally appropriate services to youth in California’s state juvenile justice system. This transition will improve the state’s ability to provide youth in the juvenile justice system with the services necessary to return safely to the community and become responsible and successful adults.” Funds provided to the new Department of Youth and Community Restoration would be used to establish a new training academy, as well as to continue support for “therapeutic communities” for offenders under age 26 who reside in a campus-style environment. A model program will be established at Valley State Prison in Chowchilla.