California’s Mental Health Service Act
A Ten Year $10 Billion Bait and Switch

An investigation of Proposition 63 by Mental Illness Policy Org and Individual Californians
August 14, 2013


Executive Summary

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In November, 2004 voters enacted a 1% tax on millionaires (Prop 63) to establish the Mental Health Services Act (MHSA) fund solely to help people with serious mental illnesses. $10 billion has been raised since inception. Voters also created a Mental Health Services Oversight and Accountability Commission (MHSOAC a/k/a “Oversight Commission”) to see the program stuck to its purpose of helping people with serious mental illness.

Primary Findings

Many people with serious mental illness are receiving critical treatment as a result of Prop 63 but billions are being diverted to other purposes:

  • $1-2 Billion of Prevention and Early Intervention (PEI) Funds was intentionally diverted to social service programs masquerading as mental illness programs or falsely claim they prevent serious mental illness.
  • $2.5 billion of the “Full Service Partnership (FSP) funds were spent without oversight of whether the recipients had schizophrenia, bipolar disorder, or the other serious mental illnesses that made them eligible for MHSA funds.
  • $23 million went to organizations directly associated with Oversight Commissioners.
  • $11 million is going to PR firms that make the Oversight Commissioners look good and hide the failure of MHSA to accomplish its mission
  • $9 million is going to organizations working prevent the seriously ill from receiving treatment until after they become violent.
  • Up to $32 million was diverted to TV shows, radio shows, PSAs and other initiatives designed to reach the public without mental illness. Some feature the Senate President Pro Tem.

Additional Findings

  • County Behavioral Health Directors chaired meetings that allowed “stakeholder input” to trump the legislative language and voter intent to spend the funds on those with serious mental illness.
  • No attempt is made to ensure programs receiving MHSA funds serve people with serious mental illness.
  • MHSA funds are being lavished on studies, reports, and consultants that generate jobs for those who get the contracts, but not services for people with serious mental illness.
  • Millions were diverted to programs intended to ‘improve the wellness’ of all Californians, rather than provide treatment to Californians with serious mental illnesses.
  •  Funds failed to expand the capacity of proven existing programs as the legislation required.
  • The most important programs to help the most seriously ill (like Laura’s Law) are going unfunded.
  • The Oversight Commission evaluated counties based on what they said they were going to do rather than on what they did.
  • A series of amendments and related legislation introduced by legislators made it less likely MHSA funds will ever reach people with serious mental illness.

This report documents each of these findings.

Who is responsible for the failure:

The Oversight Commission
The problems with MHSA are not ‘under the radar,’ they are caused by the radar operators. The Oversight Commissioners have become cheerleaders for mission creep and cronyism rather than careful stewards of public funds. The Oversight Commissioners receive funds for their programs, approve distribution of the funds, hire outside evaluators to prove they are doing a good job and PR firms to convince the public all is well.

County Behavioral Health Directors
County behavioral directors–thirty-four of whom recently voted themselves MHSA-funded IPads—have led and let the stakeholder process circumvent the language of the law and intent of the voters. They are funding anything brought to them by stakeholders, rather than limiting funding to serious mental illness programs.

California’s non-profit mental ‘health’ and social service industries
California’s non-profit mental health and social service industries provide an important safety net for many Californians. But in a gold-rush like attempt to garner funds for their own programs, they threw those with serious mental illness under the bus. Non-profits and associations like Disability Rights California, NAMI California, Mental Health America of California, each of which receive over $3 million and have representation on the Oversight Commission put their own parochial needs ahead of those of people with serious mental illness.

Senate President Pro-Tem Darrell Steinberg and the Legislature
Many of the citizens who contributed information to this report told us the Senate leader’s heart is in the right place and he can be part of the solution. Unfortunately, when we look at the facts, we are forced to conclude that since passage, the Senate President Pro-Tem Steinberg has been part of the problem.  He introduced and the legislature passed numerous bills that subverted the intent of voters to use the funds to help the most seriously ill. SB 1467 ensured fewer Innovation Funds reached persons with mental illness. Provisions he inserted in AB-100 diverted $836 million of MHSA funds to fund pre-existing state obligations His opposition to SB 664 made it harder for counties to implement Laura’s Law. His opposition to AB-1265 guaranteed mentally ill prisoners would go untreated upon end of their sentence.  SB-364 as proposed made it more dangerous for parents to call authorities to help mentally ill loved ones. We would love to see the Senator resume a leadership role in improving services for people with serious mental illnesses. Recommendations on how to do so are attached.

Conclusion: It is undeniable that some people with serious mental Illness are being helped by MHSA, but unmitigated mission creep has left many of the most seriously mentally ill seriously underserved. There is an unregulated feeding frenzy going on and Prop 63 is on its way to becoming a “Ten Year, $10 Billion Bait and Switch.”

Someone should go to jail.


1. Focus Programs on those voters intended: people with the most serious mental illnesses

  • Require counties to report and monitor MHSA expenditures by diagnosis.
  • Eliminate all regulations and guidance that diverted MHSA funds to people without mental illness and inform counties they are no longer operative.
  • Eliminate funding of programs that falsely claim they prevent serious mental illness
  • Eliminate funding of programs that refuse to accept people with serious mental illness
  • Define “Underserved Populations” by diagnosis and severity of their mental illness.
  • Eliminate spending on PR, TV shows, PSAs (“Universal Prevention Activities”) and spend the money saved on helping people with serious mental illness
  • Expand programs that existed prior to Prop 63 that successfully treated people with serious mental illness.
  • Require Prevention and Early Intervention (PEI) funds to be spent, as legislatively required, on ‘preventing mental illness from becoming severe and disabling”, not ‘preventing mental illness’ (since no one knows how to prevent serious mental illnesses like schizophrenia and bipolar disorder.)
  • Eliminate funding of organizations that do not believe mental illness exists or lobby–even with non-MHSA funds–against treatment for those who are so sick they do not recognize their need for treatment.
  • Eliminate the ability of County Behavioral Health Directors to lead or follow a stakeholder process that perverts and circumvents intent of legislation. (i.e., use science based rules rather than mob rules to distribute funds)

2. Overhaul the Oversight Commission

  • Individuals responsible for distributing or receiving MHSA funds should not be allowed on oversight committees because they have a conflict of interest.
  • Prohibit Insider Dealing: No funds should go to programs associated now, or within the last five years with board members of the Oversight Commission.
  • Increase percentage of criminal justice representatives on Oversight Commission because they know what community services are needed to prevent arrest and incarceration of the most seriously ill
  • Increase representation from inpatient psychiatric hospitals on oversight commission as they know what community services are needed to prevent rehospitalization of the most seriously ill

3. Use legislative and legal process to further voter intent, rather than divert funds to non related programs

  • Pass legislation to clarify that individuals under Laura’s Law are eligible for MHSA supported services.
  • Amend MHSA to allow funding for people with serious mental illness paroled from state prisons
  • Overturn AB 1467 which severed Innovative Funds from helping people with serious mental illness
  • Refer illegal expenditures to Attorney General

Download Full Report: California’s Mental Health Service Act: A Ten Year $10 Billion Bait and Switch.