The Behavioral Health Services Act (BHSA): Transforming a System in Crisis

The BHSA, passed through California’s Proposition 1 in 2024, takes a modern approach to an evolving mental health, substance use, and homelessness crisis

Two decades after the Mental Health Services Act (MHSA) first transformed California’s behavioral health system, the state faced new and more complex challenges. Rates of homelessness and substance use disorder had surged, and thousands of Californians with untreated behavioral health conditions were cycling through jails, hospitals, and streets.

The Behavioral Health Services Act (BHSA), passed by voters in 2024 through Proposition 1, represents the state’s most significant behavioral health reform since the MHSA. Designed to modernize and streamline the MHSA, the BHSA fundamentally rethinks how California funds, measures, and delivers care — shifting resources toward housing, treatment, and measurable outcomes.

How the BHSA came to be

Authored by Senator Susan Talamantes Eggman and championed by Governor Newsom, the BHSA was part of Proposition 1, which also included a $6.4 billion behavioral health housing bond to expand the state’s treatment and residential care infrastructure.

Together, these reforms aim to address the urgent needs of Californians living with serious mental illness or substance use disorder who are unhoused, justice-involved, or at risk of institutionalization.

What the BHSA Does

The Behavioral Health Services Act (BHSA) replaces the five MHSA funding components with three new, more focused categories designed to target resources where they’re most needed.

Together, these components reshape how California invests in behavioral health. By linking housing, treatment, and recovery supports, the BHSA aims to build a more coordinated and results-driven system of care.

1. Behavioral Health Services and Supports (BHSS)

35% funding allocation

BHSS funds the full continuum of behavioral health services for individuals with serious mental illness or substance use disorders. Programs may include outpatient treatment, crisis response, recovery supports, and workforce initiatives that improve access and equity.

BHSS builds on MHSA’s Community Services and Supports and Prevention & Early Intervention components, integrating them into one flexible category aimed at strengthening county-level service systems and community engagement.

2. Full Service Partnerships (FSPs)

35% funding allocation

FSPs remain the cornerstone of California’s community-based treatment system. Using a “whatever it takes” model, FSPs provide wraparound care and individualized support to help clients achieve stability and independence.

Under BHSA, FSPs receive dedicated funding for the first time — reinforcing their central role in addressing homelessness, reducing hospitalization, and diverting individuals from incarceration.

3. Housing Interventions

30% funding allocation

For the first time, BHSA requires a significant share of behavioral health funds to be directed toward housing and residential treatment. These investments support the development of new housing units, rental assistance, and residential care facilities that provide safe, stable environments for people recovering from mental illness or substance use disorder.

Priority populations

The BHSA also provides more criteria around eligibility by explicitly directing services toward California’s most vulnerable. Most notably, it expanded eligible populations to include people struggling with substance use disorder. Other priority populations specified in the BHSA include:

• Individuals experiencing or at risk of homelessness 
• Individuals involved in the justice system
• Those at risk of institutionalization or conservatorship

By targeting these high-need populations, the BHSA ensures that resources reach those most affected by California’s overlapping crises of homelessness, incarceration, and untreated behavioral health conditions.

Accountability & oversight

One of the most transformative elements of BHSA is its emphasis on data transparency and performance measurement. Under the BHSA, counties must:

• Develop Integrated Plans every three years covering all local behavioral health funding sources.
• Submit annual Behavioral Health Outcomes, Accountability, and Transparency Reports (BHOATR) with fiscal, service, and outcomes data.
• Conduct a Community Planning Process (CPP) to ensure the voices of clients, families, and community partners shape program priorities.

These changes aim to create more consistent, comparable, and accountable reporting across counties – helping the State understand what’s working, what isn’t, and adjust resource allocation accordingly.

Implementation Timeline

The BHSA is currently in a two-year implementation phase, led by the Department of Health Care Services (DHCS). During this period, counties are:

• Redesigning programs to align with new funding categories,
• Updating data collection and reporting systems, and
• Integrating substance use and housing programs into behavioral health care delivery.

By July 2026, all counties must fully transition to the new BHSA framework.

Why It Matters

The BHSA represents a new era of behavioral health reform in California. It builds on the MHSA’s legacy while addressing long-standing gaps — expanding eligibility, prioritizing housing, and demanding measurable outcomes.

It also marks a shift toward integration: treating mental illness and substance use together, recognizing that recovery and housing stability are intertwined.

Looking Ahead

California’s behavioral health system is currently in a two-year transition period. Following the passage of Proposition 1 (2024), the state’s counties are now working to implement the BHSA.

Until July 2026, counties continue to operate primarily under MHSA guidelines as they prepare to shift to the new BHSA framework. During this period, the state and counties are revising regulations, developing implementation plans, and aligning funding structures to meet the new statutory requirements.