Five things you need to know about the Mental Health Services Act

California State of Mind Essentials

By Amanda Cruz and Violet Gabales

California relies on multiple streams of revenue to fund public mental health services from federal, state, and local levels. One of the many sources of income is the Mental Health Services Act (MHSA). It’s a vital source of funding that directly impacts the care Californians receive for mental health and substance use care.

The MHSA was passed into law by state voters in 2004 through Proposition 63. It imposes a 1 percent tax on personal incomes above $1 million. According to a Steinberg Institute estimate, the MHSA has generated roughly $31 billion in revenue and accounts for more than 30 percent of California’s public mental health budget.

That’s a big slice of the funding pie, so if you’re a mental health advocate or California resident curious about how MHSA funding is distributed here are four things you need to know:

1. Why is the MHSA needed?

The MHSA addresses mental health issues throughout California–including lack of access to services and negative outcomes associated with untreated mental illness. The statistics alone raise concern for the state’s mental health: each year, 5–7% of adults and 5–9% of children face a serious mental illness. Failure to treat mental illness in a timely manner can result in a variety of negative impacts emotionally, socially, and even financially.

Some of California’s most devastating issues — such as homelessness, incarceration, educational failures and drop-outs, unemployment, removal of children from homes, and suicide– are rooted in untreated mental illness. Failure to treat serious mental health issues continues to be the leading cause of suicide.

2. Where does the money go?

Tax revenue from the MHSA is initially deposited into the Mental Health Services Fund (MHSF) and then distributed by the State Controller’s Office to California’s 58 counties. The counties use these funds for mental health services to meet the five components of the MHSA (see below). Additionally, five percent of the fund is used for state administration of the MHSF. In recent years, this state administrative portion has included funding for several grant programs for mental health services.

3. What kinds of activities does MHSA fund?

There are five components to MHSA funding:

Community Services and Support (CSS), Prevention and Early Intervention (PEI), Innovation (INN), Capital Facilities and Technological Needs (CFTN), and Workforce Education and Training (WET).

5 Components of the Mental Health Services Act

Counties can only use a specific percentage of these MHSA funds under each component:

  • 76 percent must be used for Community, Services and Support
  • The majority of that portion must be used on Full-Service Partnerships, and up to 20 percent of that portion may be used to further enhance counties’ local mental health systems through capital investments, workforce investments, or building funding reserves.
  • 19 percent of MHSA funds must be used for prevention and early intervention services programs.
  • 5 percent of MHSA funds must be used for innovative programs.

4. Who provides oversight for MHSA funding?

The Department of Health Care Services (DHCS) and Mental Health Services Oversight and Accountability Commission (OAC) share oversight of the MHSA.

DHCS collects revenue and expenditure information from each county and withholds funds if counties fail to comply with the requirements set by the MHSA. DHCS also provides oversight for the Community Services and Support component of the MHSA.

The OAC is responsible for approving county proposals for innovation programs and oversees the Prevention and Early Intervention and Innovation components of the MHSA. The OAC is also responsible for providing technical assistance to counties and evaluating their spending and performance of MHSA programming.

5. Why is the MHSA so important?

Aside from establishing a major source of state funding for mental health services in California, the MHSA was designed to transform the state’s mental health system and improve care to those living with mental illness.

One example of a program funded through MHSA is the Los Angeles County’s Integrated Clinic Service Model (ICM), which aims to improve access to quality, culturally competent services by uniting both mental and primary care provider sites. The model creates multidisciplinary teams of professionals, as well as trained peer counselors and paraprofessionals. The ICM expands the definition of the behavioral health workforce through the use of peer counselors and paraprofessionals, making room for more assistance in the behavioral health field. The ICM provides a variety of opportunities for service in its community including mental health treatment services, substance use services, peer counseling and self-help, primary care, homelessness/housing services, and outreach activities.

To dive further into MHSA legislation visit:


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