Orange County officials on Tuesday approved what they said is a $85 million increase in spending from mental health funds that a federal judge repeatedly scolded them for stockpiling.

The expansion was approved by county supervisors as part of a new three-year spending plan for Mental Health Services Act dollars. It includes funding for a mental health treatment campus, permanent housing and supportive services for people with mental illnesses, and renovations of a mental health crisis units.

County officials, who decided the spending plan details weeks ago, did not disclose a breakdown of which programs the $85.4 million increase is funding. A Voice of OC reporter requested it Tuesday afternoon from county spokeswoman Molly Nichelson, who said Tuesday evening she didn’t believe a breakdown would be provided by the end of the day.

When voting for the new three-year mental health spending plan, supervisors did not comment on it or the $85 million increase, other than making a change to further expand services for people in permanent supportive housing from $2 million to $5 million annually.

Money for the Mental Health Services Act, known as MHSA, comes from statewide income tax on millionaires that is supposed to go toward services for people with mental illnesses.

For years, county supervisors oversaw a stockpiling of the mental health funds that had grown to $149 million in 2015, separate from another $71 million in reserves for an economic downturn.

Last year, as county officials were hauled into federal court over a shortage of homeless shelters, Voice of OC reported the stockpiled mental health funds had reached $186 million beyond the reserves.

David O. Carter, the federal judge overseeing the case, repeatedly expressed frustration to county officials who had said wasn’t enough money for services, and the judge questioned why they weren’t spending the MHSA money.

“If this is a contrived problem, we’ve shot ourselves in the foot, quite frankly – that we might not’ve cured, but we might’ve ameliorated along the way,” Carter told county officials at a March 17, 2018 court hearing in the Santa Ana City Council chambers.

The judge cited the Voice of OC article and a state audit on the stockpiling of the funds.

“This is ready-made money, now. Taxpayer money. And I want it,” Carter told officials.

Minutes later, Supervisor Andrew Do stood before the crowd of activists, homeless people, county officials and city managers and said there was no defense for the supervisors’ inaction in spending the money.

“I’m gonna tell you, as a chairman of the Board of Supervisors we don’t have a defense. We don’t have a defense. And I’m going to be the first to own up in that we have failed,” Do said.

“To lead requires that we are proactive, not reactive. And we have failed,” he added.

“[The] thing that caused us to not be able to spend the money is political paralysis,” Do said.

He then announced the county would move to allocate $70 million of the unspent mental health dollars to help alleviate homelessness for people with severe mental illnesses.

Two days later, the supervisors started to follow through, directing public health staff to provide recommendations on how to allocate the $70.5 million for permanent supportive and shelter options for people with serious mental illnesses.

About $40 million of the $70.5 million for supportive housing has been allocated as of this month to create hundreds of new housing units, with $30.5 million remaining, according to county officials.

Carter brought up the mental health money again last month at an April 2 court hearing, where he pressed county officials to do a better job of using available state funds, including MHSA, for services.

The judge read aloud Do’s comments from a year earlier, calling the supervisor’s public admission of failure “the greatest act of courage this court has ever seen.”

Still, the judge said officials had left large sums of state and federal dollars on the table by not being proactive enough in seeking them.

“This county has walked away from hundreds of millions of dollars,” Carter said at the April 2 hearing. “We’re moving at a glacial pace.”

A week later, Voice of OC followed up on information highlighted by Carter at the hearing and reported Orange County had missed out on millions of state and federal taxpayer dollars to address homelessness by not being assertive enough in preparing for and seeking the funds.

The article reported smaller counties than OC have asked for and received tens of millions more in funding for preventative health and housing programs that studies have shown save taxpayer dollars overall, help homeless people get off the streets, and save lives.

And by applying for and receiving less funds, Orange County taxpayers appear to have been subsidizing other parts of the state rather than bringing back a proportionate share of funding.

County officials promised Carter at the April hearing they would seek more funding for mental health and homelessness services, and this month brought forward the three-year plan to increase MHSA spending by more than $80 million.

Do, speaking at Tuesday’s supervisors meeting after the increase was approved, urged officials to seek all available state funds on a homelessness health program.

“There have been comments that we, the county, leave money on the table. Like, we don’t go after all of the money that we could get. So I want to make sure that this is the maximum that we could go after,” Do said, regarding the county’s application for state Whole Person Care grants.

A key part of official plans for creating permanent housing for homeless people with mental and physical illnesses involves a yet-to-be-formed agency, the Orange County Housing Finance Trust, that was created by state law and would be overseen by county and city officials.

On Tuesday, supervisors appointed the county representatives to the housing trust board: Do, Supervisor Doug Chaffee, Sheriff Don Barnes and Treasurer-Tax Collector Shari Freidenrich.

The supervisors did not discuss it, other than Chairwoman Lisa Bartlett saying she was “pleased” to appoint them.

Orange County officials are requesting the state Legislature put $40 million in the new state budget for Orange County’s housing trust, a move that has support from most of Orange County’s legislative delegation.

Supervisors on Tuesday also approved a $1 million extension for a homeless family housing program by the Illumination Foundation. County data shows 88 percent of families in the program remained housed after one year.

The supervisors’ agenda also included a reminder that while Orange County is the third most-populous county in California, some key mental health services aren’t available in its boundaries.

All six of the skilled nursing facilities Orange County contracts with for mental health crises are outside of the county, according to a staff report for new three-year contracts with the facilities.

The facilities are in Sylmar, Downey, Duarte, Pomona, Riverside and Vista.

In their new spending plan, county officials also said they had to stop using Mental Health Services Act money to pay for probation officers involved in the local mental health court.

“It was discovered that MHSA funds cannot be used to pay for law enforcement positions, duties or functions,” the spending plan states. The probation program will continue, but will be paid for through other unspecified money sources, according to the plan.

Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at

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