Gov. Newsom proposal would add billions for mental health treatment beds

In a major legislative proposal to combat the state’s growing homelessness crisis, Gov. Gavin Newsom announced Sunday an effort to push billions of dollars toward building a vast network of treatment beds to help California’s mentally ill and drug-addicted residents find care.

Through a bond measure that could reach up to $5 billion, the governor hopes to build at minimum 6,000 new mental health beds across the state. Funding would also come through the diversion of over $1 billion annually from a pool of money created by a proposition passed by voters almost two decades ago.

“It is unacceptable what we’re dealing with at scale in California,” Newsom said at a press conference on Sunday in San Diego announcing the new effort. “We have to address and come to grips with the reality of mental health in our state and nation.”

Both the bond measure and diversion of funds would have to pass the muster of the legislature before being placed on the ballot and approved by a majority of voters in 2024.

The diversion of funds would come from the Mental Health Services Act, legislation passed as Proposition 63 by voters in 2004 that raised income taxes by 1% for California residents earning $1 million or more. The money currently funds a third of the state’s entire mental health system.

Combined with the bond measure, Newsom’s plan would extract roughly 30 percent of the $3.8 billion that the state expects this year from the tax levy. In addition to the funding infusion, the governor also intends to pass a variety of accountability and oversight measures to ensure services are being adequately provided to residents.

“We know in the clinical world it is almost impossible to serve someone who lives under a bridge or in a tent or under an encampment,” said Secretary of Health and Human Services Dr. Mark Ghaly, who joined Newsom on Sunday. “We need to get that housing available.”

According to a RAND Institute study, California currently has 16,847 psychiatric beds, a figure that includes hospitals. The study, conducted in 2022, found that the state has a shortage of beds at all levels of care.

The idea of seeking a large-scale bond measure to help secure housing for severely mentally ill people came as a welcome development for Ben Metcalf, managing director of the UC Berkeley Terner Center for Housing Innovation.

He applauded the idea for targeting a dire need: Sustainable funding that isn’t tied to unreliable state budget surpluses.

“I’m pleased to see it – I think it’s needed,” Metcalf said. “The state has some pretty good solutions for intervening to help get people out of homelessness. And it has continued to be a challenge to find the political will to raise the money.”

While the proposal does little to address how people become homeless, it could do wonders to help get people off the streets and into housing, Metcalf said. He said the state already has several important systems in place, including a robust data management system to help track people’s needs as they work their way through the public safety net.

“This is a success story – Newsom is correct to want to build on it,” Metcalf said. “He’s correct that with the state budget challenges, he can’t do what he has been doing, which is just divert budget surpluses into these programs. And so the next step in this journey is to go to the voters.”

Whether such a measure could pass remains unclear. Metcalf voiced concern about the notion of voter fatigue, particularly in cities that have already asked voters in recent years to fund their own programs to address homelessness and severe mental illness.

“There is a real risk here,” Metcalf said. “Although the voters have generally over the last 15 years shown a willingness to move these state bond measures forward for housing and homeless, I think the question at the moment is whether voters’ patience has worn thin.”

While experts in the mental health and homelessness field were supportive of the bond measure on Sunday, there is skepticism about shifting Mental Health Services Act funds away from treatment services.

Gail Osmer, a San Jose homelessness advocate for more than 30 years, says there’s already a major strain on the workforce that helps mentally ill individuals.

“There’s hardly any boots-on-the-ground helping even regular unhoused people — and especially someone in crisis,” she said. “We need to get more money into hiring more professionals.”

Michelle Doty Cabrera, who heads the County Behavioral Health Directors Association of California, concurred with Osmer: “There’s no way we will end this crisis without both housing and treatment.”

She added, “To make real progress on homelessness, we need the investments to be additive rather than shifting services away from upstream treatment for very vulnerable residents.”

When asked about the diversion of funds at Sunday’s press conference, Sacramento Mayor Darrell Steinberg, co-author of Proposition 63, said the action was necessary to chip away at the state’s most severe cases of homelessness and mental illness.