In 2004, when California voters said yes to a ballot initiative that taxes millionaires to fund mental health services, they were told there would be strict state oversight of the spending.

Now, more than a decade after that promise, government accountability watchdogs say there is a glaring lack of oversight of the more than $1 billion raised each year by the initiative, known as the Mental Health Services Act or MHSA.

Counties across the state, including Orange, have been able to stockpile hundreds of millions in cash while the public has limited information about where the money’s going and what impact it has had on major goals.

“After 10 years, the state cannot provide basic answers to basic questions: Has homelessness declined? Are programs helping Californians stay at work or in school? Who is being served and who is falling through the cracks?” wrote Pedro Nava, chairman of the bipartisan Little Hoover Commission, in a letter to legislative leaders earlier this year following an investigation by the commission.

The investigation and its fallout come amid questions as to why Orange County has built up about $220 million in unspent MHSA funds, while issues such as shortages of psychiatric beds and months-long wait times for psychiatrist appointments persist.

“When you have this money that’s specifically earmarked for mental health services in our community, I lose the rationale for a contingency,” county Supervisor Todd Spitzer said in 2013, when the reserves were much smaller than they are today.

“In my opinion, every single dollar shouldn’t be in a bank…it should be out on the street, helping people get services.”

(Click here to read the Little Hoover Commission report.)

Many officials and mental health advocates describe the act as an invaluable resource that has made a huge positive difference in the lives of Californians with mental illnesses.  Well over 1,000 different programs are supported statewide, like crisis beds and early intervention services.

But advocates say there continue to be problems with transparency and accountability over how those dollars are spent.

“If a county is not adhering to the vision of the [MHSA], there is no statewide oversight body with authority over county MHSA funding distribution that would be able to oversee the process,” Jessica Cruz, executive director of the National Alliance on Mental Illness’ California chapter, told the Little Hoover Commission.

Years of Concerns

The concerns raised by the commission are not new. In fact, in 2013 the state’s top auditor found that “none of the entities charged with evaluating the effectiveness of [Mental Health Services Act] programs…have undertaken serious efforts to do so.”

Counties “rarely developed specific objectives to assess the effectiveness of the programs,” according to the auditor’s findings.

In testimony last year to the commission, state officials were direct in acknowledging that they are lacking in data to show whether people are doing better because of the law’s services.

“Do we know the efficacy of these programs?” asked Karen Baylor, deputy director of the Department of Health Care Services. “No, we don’t.”

Expanded collection of MHSA data by the department won’t start for another five years or so when a new computer system is finished, according to spokeswoman Carol Sloan.

Asked why it’s expected to take so long, Sloan said the project is still “in the beginning stages.”

County mental health directors, meanwhile, dispute the report, saying counties do report data on outcomes to the state and that publicly-available data on the “full-service partnerships” that receive 40 percent of MHSA funding shows major drops in homelessness, hospitalizations and incarcerations.

More Harm Than Good

In a letter to legislative leaders and Gov. Jerry Brown, the county directors warned that the commission’s report could harm services for people with mental illnesses.

“The report increases the risk that people whose lives have improved because of the MHSA will have fewer mental health resources to improve the quality of their lives and – by logical extension – the quality of life in communities across California,” wrote the County Behavioral Health Directors Association of California.

Also heavily involved in the issue is the Steinberg Institute for Advancing Health Policy and Leadership, a nonprofit founded by former state Senate leader Darrell Steinberg.

Its executive director says that while much data is being collected, it’s important to present it to the public in an understandable way to show the law’s success.

“We think data’s really, really important,” said Maggie Merritt, who emphasized that the law has made a huge positive impact. “I think the biggest problem is that everybody’s collecting data in their own little silos and that whatever data has been reported on has been reported in such a convoluted way that it’s not resonated, it’s not digestible.”

When the Little Hoover Commission’s report first came out, there was interest among policymakers to step up state oversight in significant ways, according commission Executive Director Carole D’Elia. But county mental health directors pushed back, she said, sending their January letter to legislative leaders.

The county directors and the Steinberg Institute also released a study they commissioned showing big drops in homelessness and arrests among participants in full-service partnerships in the 2012 fiscal year.

Policymakers, including members of the mental health law’s oversight commission, then backpedaled, saying they shouldn’t take away counties’ autonomy, according to D’Elia.

One concern is that if there’s a lack of data to back up the law’s successes, the funding could be at risk in the next economic downturn.

“It was really difficult for us to just get a number of how much money” was going where, let alone what it was doing, D’Elia said. “If you don’t document how you’re spending it, you’re very vulnerable to losing it.”

It’s unclear where legislative leaders currently stand in regard to the issues outlined by the Little Hoover Commission.

It is possible that a push for more oversight could come from the state Legislature’s mental health committees. However, neither of the committees’ chairmen – Sen. Jim Beall (D-San Jose) and Assemblyman Sebastian Ridley-Thomas (D-Los Angeles) – responded to calls for comment.

A member of the law’s oversight commission, meanwhile, noted that some of the report’s recommendations are in the midst of being implemented.

For example, to improve financial transparency, the commission is putting together online documents to better show citizens how each county’s money is being spent among seven funding categories, according to oversight commission Vice Chair John Buck.  They’re expected to be posted online within a year.

As part of that effort, counties – many of which haven’t filed financial reports to the state in years – are being told to file up-to-date reports by December, he added.

And as for the years it’s expected to take to report system-wide data on outcomes, Buck said that in the meantime, the oversight commission has hired analysts to study and report data on specific programs.

Rose King, a statewide mental health advocate and co-author of the MHSA, said there wouldn’t be such controversy and criticism if the law would have been implemented as originally intended.

The initial idea was to have counties analyze the biggest gaps in their systems – such as a shortage of mental health clinics – and develop plans to meet those needs using the law’s funding, said King, who served as chief of staff to former Lt. Gov. Leo McCarthy.

But, she said, the law was later re-crafted to focus on having counties hire contractors with ideas for new programs, without state reviews of those plans.

The act was supposed to be “about fixing the systems,” said King. “They were not supposed to create 1,600 new programs statewide. It’s totally a gift to the contractors.”

That approach has contributed, she said, to the mental health system becoming “so very fragmented, so mysterious, so chaotic.”

“They just invent things to get contracts and spend this money. And so everybody’s bright idea is on the table for consideration for what’s good for mental illness…instead of seeing a psychiatrist and a therapist and a case manager and a social worker.”

In an effort to ensure people who need mental health treatment receive it, King and her supporters are trying to get a bill introduced that establishes “mental health parity,” a right to medically necessary mental health treatment under the state’s low-income insurance plan, Medi-Cal.

People with mental illnesses “should not have to navigate two separate health care programs” for physical and mental health, she said.  “Mental health should be in the medical system.”

It would be “a whole lot cheaper,” she added, to provide services in “top-notch outpatient clinics” than for people with mental illnesses to continue ending up in emergency rooms, jails, hospitals, prisons or the street.

You can contact Nick Gerda at, and follow him on Twitter: @nicholasgerda.

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