SANTA CLARA COUNTY OFFICIALS were in the throes of a mental health crisis four years ago and took action to expand treatment. That progress is about to be scaled back as the county confronts an extreme budget shortfall.
The Behavioral Health Services Department faces a $100 million deficit in the coming fiscal year due to an array of issues that include federal cuts to Medi-Cal triggered by H.R. 1 , changes in state funding for mental health services, the end of one-time COVID-19 dollars and rising cost of living. That’s all forcing the department to pay more toward supportive housing for patients.
The biggest hit comes from a shift in how the state mandates the way money is spent, with more emphasis placed on acute care rather than preventive services. County leaders had ramped up preventive services by implementing more residential treatment facilities, adding a behavior health navigator program, launching a police alternative with a mental health mobile crisis program known as TRUST and other proactive efforts. Now they are reevaluating future plans.
Representatives for the behavioral health department deferred comment to County Executive James Williams.
“State-directed shifts in behavioral health funding and layer after layer of state mandates are creating extraordinary challenges for counties across California, as flexibility narrows while demand for services continues to grow,” Williams told San José Spotlight. “Despite these very real constraints, we remain committed to sustaining critical behavioral health programs, improving coordination across our crisis response continuum and advancing prevention and early intervention wherever possible.”
Williams said the behavioral health department plans to bring recommendations to the Board of Supervisors to mitigate negative impacts when the recommended budget is released May 1.
Trim, don’t trash
As officials review next fiscal year’s budget, District 4 Supervisor Susan Ellenberg said her first instinct is to pare down programs instead of eliminating them.
“We have no choice but to pull back,” she told San José Spotlight. “I would still rather us continue to operate even skeletal programs. Because when you cut a program entirely, you lose the infrastructure, you lose the employees associated with it and it’s much harder to restart.”
The biggest challenge facing the behavioral health department comes from Proposition 1, which shifted money away from county to state programs — from 5% to 10%. As a result, the county will lose about $6.6 million each year.
Proposition 1, which voters narrowly approved in 2024, also delineated how funds should be allocated, including requiring a significant portion to be spent on acute care. This removed the flexibility counties had to spend on other mental health services, such as outreach and prevention. Proposition 1 also renamed the Mental Health Services Act to the Behavioral Health Services Act.
“I would still rather us continue to operate even skeletal programs. Because when you cut a program entirely, you lose the infrastructure, you lose the employees associated with it and it’s much harder to restart.”
Supervisor Susan Ellenberg
More than one-third of funding must be directed toward individuals with acute needs under the new Behavioral Health Services Act model. Another 30% must be spent on housing — primarily for homeless people — 18% on preventative care and 18% on supportive services.
Santa Clara County spends nearly half of its funding on supportive services, 29% on housing, 12% on acute care and 8% on prevention services.
Ellenberg said investing in services at the beginning, when people show their first signs of risk, is better for the person and will cost less tax money than waiting until someone is in need of acute care.
“It is extraordinarily short-term thinking to divest from preventative services,” Ellenberg said. “It’s a huge mistake, and will have enormous consequences down the line.”
Programs on hold
In 2022, Ellenberg and District 3 Supervisor Otto Lee declared a mental health crisis in the county due to the lack of treatment beds and called for more investments. Since then, the county has added 263 beds, including 53 acute in-patient psychiatric beds at for-profit San Jose Behavioral Health.
The county set a goal of adding 586 beds for all levels of mental health care for a total 1,600 beds by the end of 2030. But that progress will be halted as supervisors decide what next fiscal year’s budget will entail, and what programs will be stripped down.
The behavioral health department spends close to $1 billion a year, nearly double from the nearly $524 million in 2020 due to expanded services and treatment beds. Some of its programs such as CARE Court, which allows family members and first responders to petition the court to help an adult with psychotic disorders, receive no state funding even though the program is state mandated.
“Mental health is one of the absolute priorities of the county,” Ellenberg said. “If we have to slow expansion, I would do that in order to preserve current services, rather than talking immediately about cutting.”
Contact Joyce Chu at joyce@sanjosespotlight.com or @joyce_speaks on X.
This story originally appeared in San Jose Spotlight.