What the Measure Would Do

Proposition 1 includes two pieces of legislation intended to transform the state’s mental health system: Senate Bill 326 to modernize the Mental Health Services Act (MHSA) and Assembly Bill 531, both signed by Governor Newsom in October 2023. Prop. 1 would authorize issuance of $6.38 billion in general obligation bonds to build new behavioral health-related housing and treatment facilities across the state.^[1]

Prop. 1 would recast the MHSA of 2004 as the Behavioral Health Services Act (BHSA) and adapt it in four ways: 1) expand its scope to include substance use disorders; 2) modify how revenue from the 1% tax on incomes above $1 million is spent under the law, including requiring that 30% of the Behavioral Health Services Fund be allocated to housing interventions programs; 3) increase the size of the oversight commission, including people who have or have had a behavioral health disorder; and 4) authorize the state to issue $6.38 billion in bonds to finance housing for homeless individuals and veterans with mental health or substance use disorders. The measure would also establish a working group to assess fluctuations in tax revenues generated by the BHSA and develop a reliable strategy for greater fiscal stability.

SB 326 modernizes the MHSA to meet current behavioral health system needs and demand for housing and services. Prop. 1’s proposed reforms would do four things: 1) expand services to include treatment for those with substance use disorders, 2) prioritize care for those with the most serious mental illness, 3) provide ongoing resources for housing and the behavioral health workforce, and 4) continue investments in prevention and early-intervention services for youth, including innovative pilot programs. Prop. 1 would dedicate 30% of the funds sent to County Behavioral Health Programs to housing interventions programs, with 50% of those funds for people who are chronically homeless, particularly those in encampments, and up to 25% for capital development projects.

AB 531 enacts the Behavioral Health Infrastructure Bond Act of 2024. Prop. 1 would authorize the issuance of $6.38 billion in general obligation bonds to finance the acquisition, conversion, rehabilitation, or new construction of permanent supportive housing for people experiencing homelessness, including $1.05 billion dedicated to veterans’ housing. Projects funded by these bonds would be allowable “by right,” meaning without case-by-case approval or reviews.

The Backstory

In 2004, voters approved Prop. 63, the Mental Health Services Act, which created a 1% tax on incomes over $1 million in order to fund county mental health services programs. A volatile source of revenue, the MHSA currently generates about $4 billion per year.

The California State Legislature and Governor Newsom worked with counties, service providers, and mental health advocates to make changes to the MHSA distribution “buckets” or expenditure categories and to develop a bond measure to finance permanent supportive housing and treatment facilities for people experiencing severe mental illness and substance use disorders.

Prop 1. is a response to California’s public health and homelessness crises. The 2023 Point-in-Time count released in December 2023 found that homelessness rose by 6% in California over the past year, with more than 180,000 residents homeless. Of these residents, more than 123,000 are unsheltered.

Some mental health advocates have expressed public opposition to Prop. 1, noting in particular that an amendment to the bond authorization language allows for the financing of locked treatment facilities for people with mental illness and substance use disorders, which they reject as “forced treatment” and a coercive approach to care, calling instead for voluntary alternatives.

Prop. 1 was placed on the ballot by the California Legislature and must be approved by voters because it is modifying Prop. 63. It requires a simple majority (50% plus one vote) to pass.

Equity Impacts

In passing legislation to place Prop. 1 on the ballot, the legislature cited research from the University of California–San Francisco (UCSF) Benioff Homelessness and Housing Initiative that found that 82% of homeless Californians reported a period in their life when they experienced a serious mental health condition. Of these Californians, 27% had been hospitalized for a mental health condition, and nearly two-thirds had had a period in their life in which they regularly used illicit drugs.^[2]

According to the UCSF study, “people who experience homelessness have higher rates of mental health conditions and substance use than the general population. For many, these problems predated their first episode of homelessness.” In addition, people with serious behavioral health conditions are more vulnerable to precarious living situations, particularly in high-cost states like California that also have a shortage of affordable housing.

Chronic homelessness disproportionately impacts people of color. According to the California Budget and Policy Center, “while Black Californians make up roughly 5% of the state’s population, they comprised over 1 in 4 unhoused people who made contact with a homelessness service provider in 2021–22.”^[3]

In addition, one-third — or more than 10,000 — of the nation’s homeless veterans reside in California.^[4] The legislature has also found that veterans have a higher rate of suicide than the general population and experience higher rates of mental illness or substance abuse disorder.

Pros

• Housing chronically homeless people with complex mental and behavioral health conditions will provide them with stability and support their care.
• Accountability, oversight, and reporting on MHSA expenditures and outcomes would increase.
• Early-intervention funding for children and youth would help stop homelessness before it happens, preventing trauma and disruption.
• Permanent supportive housing and behavioral health treatment would reduce homelessness for people in need of these interventions.
• Permanent supportive housing and treatment would free up space in short-term shelters and interim housing, which are oversubscribed, and would facilitate flow through the housing intervention system.
• Updating the state’s mental health system and providing people experiencing homelessness with the permanent housing and behavioral health services they need is humane. The state is recognizing that mental and behavioral health issues have evolved over the past two decades, and the expansion to include substance abuse disorders is a positive move.

Cons

• SPUR reviewed opposition arguments and found them insufficiently persuasive to impact our position.