Amended in Assembly June 28, 2016

Amended in Assembly May 25, 2016

Senate Bill No. 852

Introduced by Committee on Budget and Fiscal Review

January 7, 2016

An act begin delete relating to the Budget Act of 2016. end delete begin insert to amend Sections 5830, 5845, 5847, 5848, 5897, and 5899 of, and to add Part 3.9 (commencing with Section 5849.1) to Division 5 of, the Welfare and Institutions Code, relating to mental health services, and making an appropriation therefor, to take effect immediately, bill related to the budget. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 852, as amended, Committee on Budget and Fiscal Review. begin delete Budget Act of 2016. end delete begin insert Mental health services. end insert

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(1) The Mental Health Services Act (MHSA), an initiative measure enacted by the voters as Proposition 63 at the November 2, 2004, statewide general election, imposes a 1% tax on that portion of a taxpayer’s taxable income that exceeds $1,000,000 and requires that the revenue from that tax be deposited in the Mental Health Services Fund to fund various county mental health programs. The MHSA authorizes the Legislature to amend its provisions by a 2⁄3 vote, provided that the amendment is consistent with and furthers the intent of the act.

end insert begin insert

This bill would establish the No Place Like Home Program, to be administered by the Department of Housing and Community Development. The bill would require the department to award $2,000,000,000 through a competitive program among counties to finance capital costs, including, but not limited to, acquisition, design, construction, rehabilitation, or preservation, and to capitalize operating reserves, of permanent supportive housing for the target population, as specified. The bill would further require the department to allocate $1,800,000,000 to a competitive program, as specified, and would require that applicants meet specified requirements to be eligible to apply for funding and would require the department to evaluate applications using specified criteria. The bill would require the department to award moneys in four rounds, as provided. The bill would require the department to allocate $200,000,000 among all counties within this state in amounts based on a calculation of the number of homeless persons residing in each county or in $500,000 amounts, whichever is greater for each county. The bill would establish, and continuously appropriate, the No Place Like Home Fund for these purposes. The bill would also appropriate $6,200,000 from the Mental Health Services Fund to the department to provide technical and application preparation assistance to counties. The bill would require counties to annually report to the department on activities funded under these provisions, as provided.

end insert begin insert

This bill would establish the No Place Like Home Program Advisory Committee, as specified, and require the committee to assist and advise the department in the implementation of the program, review and make recommendations on the department’s guidelines, review the department’s progress in distributing moneys pursuant to the program, and provide advice and guidance on statewide homelessness issues. The bill would also require the department to submit a report on the program to the Legislature by December 31 of each year, as specified, and, upon an appropriation for that purpose, to contract with a public or private research university in this state to evaluate the program, as provided.

end insert begin insert

(2) The MHSA, among other things, requires county health programs to develop plans for innovative programs, to be funded as provided, and requires that the innovative program have specified purposes, including increasing access to services. Existing law requires that the projects included in the innovative program portion of a county health plan meet specified requirements, including increasing access to underserved groups and increasing access to services.

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This bill would specify that the services required to be provided through these programs, among other things, may include the provision of permanent supportive housing.

end insert begin insert

(3) The MHSA, among other things, establishes the Mental Health Services Oversight and Accountability Commission to oversee the administration of various parts of the act. Existing law requires the commission to consist of 16 voting members, including, among others, persons with mental illness, family members of persons with mental illness, a physician, a mental health professional, a county sheriff, a superintendent of a school district, a representative of a labor organization, a representative of an employer, as specified, and a representative of a health care services plan or insurer.

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This bill would require one of the persons described above to have a background in auditing.

end insert begin insert

Existing law requires each county mental health program to prepare and submit a 3-year program and expenditure plan and annual updates to the commission, as specified. Existing law requires the plans to include reports on the achievement of performance outcomes for services, as specified.

end insert begin insert

This bill would require the 3-year program and expenditure plan to also be submitted to the State Department of Health Care Services. The bill would require the department to post on its website the three-year program and expenditure plan submitted by every county and a summary of the performance outcomes submitted by counties, as specified.

end insert begin insert

(4) The MHSA, among other things, requires the State Department of Health Care Services to implement various parts of the act through the annual county mental health services performance contract, as specified. Existing law, when a county mental health program is not in compliance with its performance contract, authorizes the department to request a plan of correction with a specific timeline to achieve improvements.

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This bill would require the department to conduct program reviews of performance contracts to determine compliance and would require each county performance contract to be reviewed at least once every 3 years. The bill would also require the department to post on its website any plans of correction requested and the related findings.

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(5) The MHSA, among other things, requires the State Department of Health Care Services, in consultation with the Mental Health Services Oversight and Accountability Commission and the County Behavioral Health Directors Association of California, to develop and administer instructions for the Annual Mental Health Services Act and Expenditure Report. Existing law requires the report to be submitted electronically to the department and the commission.

end insert begin insert

This bill would require the instructions to include a requirement that the county certify the accuracy of the report described above. The bill would require the department and commission to post each county’s report on its website, as specified. The bill would also require the department, in consultation with the commission and the County Behavioral Health Directors Association of California, to revise the instructions described above, as specified. The bill, if a county does not submit the report described above by the required deadline, would authorize the department to withhold MHSA funds until the reports are submitted.

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(6) This bill would declare that its provisions further the intent of the MHSA.

end insert begin insert

(7) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

end insert begin delete

This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2016.

end delete

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 5830 of the end insert begin insert Welfare and Institutions Code end insert

begin insert is amended to read: end insert

5830.  

County mental health programs shall develop plans for
innovative programs to be funded pursuant to paragraph (6) of
subdivision (a) of Section 5892.

(a) The innovative programs shall have the following purposes:

(1) To increase access to underserved groups.

(2) To increase the quality of services, including better
outcomes.

(3) To promote interagency collaboration.

(4) To increase access to begin delete services. end delete begin insert services, end insert begin insert including, but not
limited to, services provided through permanent supportive
housing. end insert

(b) All projects included in the innovative program portion of
the county plan shall meet the following requirements:

(1) Address one of the following purposes as its primary
purpose:

(A) Increase access to underserved begin delete groups. end delete begin insert groups, end insert begin insert which may
include providing access through the provision of permanent
supportive housing. end insert

(B) Increase the quality of services, including measurable
outcomes.

(C) Promote interagency and community collaboration.

(D) Increase access to begin delete services. end delete begin insert services, end insert begin insert which may include
providing access through the provision of permanent supportive
housing. end insert

(2) Support innovative approaches by doing one of the
following:

(A) Introducing new mental health practices or approaches,
including, but not limited to, prevention and early intervention.

(B) Making a change to an existing mental health practice or
approach, including, but not limited to, adaptation for a new setting
or community.

(C) Introducing a new application to the mental health system
of a promising community-driven practice or an approach that has
been successful in nonmental health contexts or settings.

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(D) Participating in a housing program designed to stabilize a
person’s living situation while also providing supportive services
on site.

end insert

(c) An innovative project may affect virtually any aspect of
mental health practices or assess a new or changed application of
a promising approach to solving persistent, seemingly intractable
mental health challenges, including, but not limited to, any of the
following:

(1) Administrative, governance, and organizational practices,
processes, or procedures.

(2) Advocacy.

(3) Education and training for service providers, including
nontraditional mental health practitioners.

(4) Outreach, capacity building, and community development.

(5) System development.

(6) Public education efforts.

(7) Research.

(8) Services and interventions, including prevention, early
intervention, and treatment.

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(9) Permanent supportive housing development.

end insert

(d) If an innovative project has proven to be successful and a
county chooses to continue it, the project workplan shall transition
to another category of funding as appropriate.

(e) County mental health programs shall expend funds for their
innovation programs upon approval by the Mental Health Services
Oversight and Accountability Commission.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 5845 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

5845.  

(a) The Mental Health Services Oversight and
Accountability Commission is hereby established to oversee Part
3 (commencing with Section 5800), the Adult and Older Adult
Mental Health System of Care Act; Part 3.1 (commencing with
Section 5820), Human Resources, Education, and Training
Programs; Part 3.2 (commencing with Section 5830), Innovative
Programs; Part 3.6 (commencing with Section 5840), Prevention
and Early Intervention Programs; and Part 4 (commencing with
Section 5850), the Children’s Mental Health Services Act. The
commission shall replace the advisory committee established
pursuant to Section 5814. The commission shall consist of 16
voting members as follows:

(1) The Attorney General or his or her designee.

(2) The Superintendent of Public Instruction or his or her
designee.

(3) The Chairperson of the Senate Health and Human Services
Committee or another member of the Senate selected by the
President pro Tempore of the Senate.

(4) The Chairperson of the Assembly Health Committee or
another member of the Assembly selected by the Speaker of the
Assembly.

(5) Two persons with a severe mental illness, a family member
of an adult or senior with a severe mental illness, a family member
of a child who has or has had a severe mental illness, a physician
specializing in alcohol and drug treatment, a mental health
professional, a county sheriff, a superintendent of a school district,
a representative of a labor organization, a representative of an
employer with less than 500 employees and a representative of an
employer with more than 500 employees, and a representative of
a health care services plan or insurer, all appointed by the
Governor. In making appointments, the Governor shall seek
individuals who have had personal or family experience with
mental illness. begin insert At least one of the persons appointed pursuant to
this paragraph shall have a background in auditing. end insert

(b) Members shall serve without compensation, but shall be
reimbursed for all actual and necessary expenses incurred in the
performance of their duties.

(c) The term of each member shall be three years, to be
staggered so that approximately one-third of the appointments
expire in each year.

(d) In carrying out its duties and responsibilities, the commission
may do all of the following:

(1) Meet at least once each quarter at any time and location
convenient to the public as it may deem appropriate. All meetings
of the commission shall be open to the public.

(2) Within the limit of funds allocated for these purposes,
pursuant to the laws and regulations governing state civil service,
employ staff, including any clerical, legal, and technical assistance
as may appear necessary. The commission shall administer its
operations separate and apart from the State Department of Health
Care Services and the California Health and Human Services
Agency.

(3) Establish technical advisory committees such as a committee
of consumers and family members.

(4) Employ all other appropriate strategies necessary or
convenient to enable it to fully and adequately perform its duties
and exercise the powers expressly granted, notwithstanding any
authority expressly granted to any officer or employee of state
government.

(5) Enter into contracts.

(6) Obtain data and information from the State Department of
Health Care Services, the Office of Statewide Health Planning and
Development, or other state or local entities that receive Mental
Health Services Act funds, for the commission to utilize in its
oversight, review, training and technical assistance, accountability,
and evaluation capacity regarding projects and programs supported
with Mental Health Services Act funds.

(7) Participate in the joint state-county decisionmaking process,
as contained in Section 4061, for training, technical assistance,
and regulatory resources to meet the mission and goals of the
state’s mental health system.

(8) Develop strategies to overcome stigma and discrimination,
and accomplish all other objectives of Part 3.2 (commencing with
Section 5830), 3.6 (commencing with Section 5840), and the other
provisions of the act establishing this commission.

(9) At any time, advise the Governor or the Legislature regarding
actions the state may take to improve care and services for people
with mental illness.

(10) If the commission identifies a critical issue related to the
performance of a county mental health program, it may refer the
issue to the State Department of Health Care Services pursuant to
Section 5655.

(11) Assist in providing technical assistance to accomplish the
purposes of the Mental Health Services Act, Part 3 (commencing
with Section 5800), and Part 4 (commencing with Section 5850)
in collaboration with the State Department of Health Care Services
and in consultation with the California Mental Health Directors
Association.

(12) Work in collaboration with the State Department of Health
Care Services and the California Mental Health Planning Council,
and in consultation with the California Mental Health Directors
Association, in designing a comprehensive joint plan for a
coordinated evaluation of client outcomes in the community-based
mental health system, including, but not limited to, parts listed in
subdivision (a). The California Health and Human Services Agency
shall lead this comprehensive joint plan effort.

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begin insert SEC. 3. end insert   

end insert

begin insert Section 5847 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

5847.  

Integrated Plans for Prevention, Innovation, and System
of Care Services.

(a) Each county mental health program shall prepare and submit
a three-year program and expenditure plan, and annual updates,
adopted by the county board of supervisors, to the Mental Health
Services Oversight and Accountability Commission begin insert and the State
Department of Health Care Services end insert within 30 days after adoption.

(b) The three-year program and expenditure plan shall be based
on available unspent funds and estimated revenue allocations
provided by the state and in accordance with established
stakeholder engagement and planning requirements as required in
Section 5848. The three-year program and expenditure plan and
annual updates shall include all of the following:

(1) A program for prevention and early intervention in
accordance with Part 3.6 (commencing with Section 5840).

(2) A program for services to children in accordance with Part
4 (commencing with Section 5850), to include a program pursuant
to Chapter 4 (commencing with Section 18250) of Part 6 of
Division 9 or provide substantial evidence that it is not feasible to
establish a wraparound program in that county.

(3) A program for services to adults and seniors in accordance
with Part 3 (commencing with Section 5800).

(4) A program for innovations in accordance with Part 3.2
(commencing with Section 5830).

(5) A program for technological needs and capital facilities
needed to provide services pursuant to Part 3 (commencing with
Section 5800), Part 3.6 (commencing with Section 5840), and Part
4 (commencing with Section 5850). All plans for proposed facilities
with restrictive settings shall demonstrate that the needs of the
people to be served cannot be met in a less restrictive or more
integrated begin delete setting. end delete begin insert setting, such as permanent supportive housing. end insert

(6) Identification of shortages in personnel to provide services
pursuant to the above programs and the additional assistance
needed from the education and training programs established
pursuant to Part 3.1 (commencing with Section 5820).

(7) Establishment and maintenance of a prudent reserve to
ensure the county program will continue to be able to serve
children, adults, and seniors that it is currently serving pursuant
to Part 3 (commencing with Section 5800), the Adult and Older
Adult Mental Health System of Care Act, Part 3.6 (commencing
with Section 5840), Prevention and Early Intervention Programs,
and Part 4 (commencing with Section 5850), the Children’s Mental
Health Services Act, during years in which revenues for the Mental
Health Services Fund are below recent averages adjusted by
changes in the state population and the California Consumer Price
Index.

(8) Certification by the county behavioral health director, which
ensures that the county has complied with all pertinent regulations,
laws, and statutes of the Mental Health Services Act, including
stakeholder participation and nonsupplantation requirements.

(9) Certification by the county behavioral health director and
by the county auditor-controller that the county has complied with
any fiscal accountability requirements as directed by the State
Department of Health Care Services, and that all expenditures are
consistent with the requirements of the Mental Health Services
Act.

(c) The programs established pursuant to paragraphs (2) and
(3) of subdivision (b) shall include services to address the needs
of transition age youth 16 to 25 years of age. In implementing this
subdivision, county mental health programs shall consider the
needs of transition age foster youth.

(d) Each year, the State Department of Health Care Services
shall inform the County Behavioral Health Directors Association
of California and the Mental Health Services Oversight and
Accountability Commission of the methodology used for revenue
allocation to the counties.

(e) Each county mental health program shall prepare expenditure
plans pursuant to Part 3 (commencing with Section 5800) for adults
and seniors, Part 3.2 (commencing with Section 5830) for
innovative programs, Part 3.6 (commencing with Section 5840)
for prevention and early intervention programs, and Part 4
(commencing with Section 5850) for services for children, and
updates to the plans developed pursuant to this section. Each
expenditure update shall indicate the number of children, adults,
and seniors to be served pursuant to Part 3 (commencing with
Section 5800), and Part 4 (commencing with Section 5850), and
the cost per person. The expenditure update shall include utilization
of unspent funds allocated in the previous year and the proposed
expenditure for the same purpose.

(f) A county mental health program shall include an allocation
of funds from a reserve established pursuant to paragraph (7) of
subdivision (b) for services pursuant to paragraphs (2) and (3) of
subdivision (b) in years in which the allocation of funds for services
pursuant to subdivision (e) are not adequate to continue to serve
the same number of individuals as the county had been serving in
the previous fiscal year.

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(g) The department shall post on its website the three-year
program and expenditure plans submitted by every county pursuant
to subdivision (a) in a timely manner.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 5848 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

5848.  

(a) Each three-year program and expenditure plan and
update shall be developed with local stakeholders, including adults
and seniors with severe mental illness, families of children, adults,
and seniors with severe mental illness, providers of services, law
enforcement agencies, education, social services agencies, veterans,
representatives from veterans organizations, providers of alcohol
and drug services, health care organizations, and other important
interests. Counties shall demonstrate a partnership with constituents
and stakeholders throughout the process that includes meaningful
stakeholder involvement on mental health policy, program
planning, and implementation, monitoring, quality improvement,
evaluation, and budget allocations. A draft plan and update shall
be prepared and circulated for review and comment for at least 30
days to representatives of stakeholder interests and any interested
party who has requested a copy of the draft plans.

(b) The mental health board established pursuant to Section
5604 shall conduct a public hearing on the draft three-year program
and expenditure plan and annual updates at the close of the 30-day
comment period required by subdivision (a). Each adopted
three-year program and expenditure plan and update shall include
any substantive written recommendations for revisions. The
adopted three-year program and expenditure plan or update shall
summarize and analyze the recommended revisions. The mental
health board shall review the adopted plan or update and make
recommendations to the county mental health department for
revisions.

(c) The plans shall include reports on the achievement of
performance outcomes for services pursuant to Part 3 (commencing
with Section 5800), Part 3.6 (commencing with Section 5840),
and Part 4 (commencing with Section 5850) funded by the Mental
Health Services Fund and established jointly by the State
Department of Health Care Services and the Mental Health Services
Oversight and Accountability Commission, in collaboration with
the County Behavioral Health Directors Association of California.

(d) Mental health services provided pursuant to Part 3
(commencing with Section 5800) and Part 4 (commencing with
Section 5850) shall be included in the review of program
performance by the California Mental Health Planning Council
required by paragraph (2) of subdivision (c) of Section 5772 and
in the local mental health board’s review and comment on the
performance outcome data required by paragraph (7) of subdivision
(a) of Section 5604.2.

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(e) The department shall annually post on its website a summary
of the performance outcomes reports submitted by counties if
clearly and separately identified by counties as the achievement
of performance outcomes pursuant to subdivision (c).

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Part 3.9 (commencing with Section 5849.1) is added
to Division 5 of the end insert begin insert Welfare and Institutions Code end insert begin insert , to read: end insert

begin insert

 

PART  begin insert 3.9. end insert   The No Place Like Home Program

 

begin insert 5849.1. end insert   

(a) The Legislature finds and declares that this part
is consistent with and furthers the purposes of the Mental Health
Services Act, enacted by Proposition 63 at the November 2, 2004,
statewide general election, within the meaning of Section 18 of
that measure.

(b) The Legislature further finds and declares all of the
following:

(1) Housing is a key factor for stabilization and recovery to
occur and results in improved outcomes for individuals living with
a mental illness.

(2) Untreated mental illness can increase the risk of
homelessness, especially for single adults.

(3) California has the nation’s largest homeless population that
is disproportionally comprised of women with children, veterans,
and the chronically homeless.

(4) California has the largest number of homeless veterans in
the United States at 24 percent of the total population in our nation.
Fifty percent of California’s veterans live with serious mental
illness and 70 percent have a substance use disorder.

(5) Fifty percent of mothers experiencing homelessness have
experienced a major depressive episode since becoming homeless
and 36 percent of these mothers live with post-traumatic stress
disorder and 41 percent have a substance use disorder.

(6) Ninety-three percent of supportive housing tenants who live
with mental illness and substance use disorders voluntarily
participated in the services offered.

(7) Adults who receive 2 years of “whatever-it-takes,” or Full
Service Partnership services, experience a 68 percent reduction
in homelessness.

(8) For every dollar of bond funds invested in permanent
supportive housing, the state and local governments can leverage
a significant amount of additional dollars through tax credits,
Medicaid health services funding, and other housing development
funds.

(9) Tenants of permanent supportive housing reduced their visits
to the emergency department by 56 percent, and their hospital
admissions by 45 percent.

(10) The cost in public services for a chronically homeless
Californian ranges from $60,000 to $100,000 annually. When
housed, these costs are cut in half and some reports show
reductions in cost of more than 70 percent, including potentially
less involvement with the health and criminal justice systems.

(11) Californians have identified homelessness as their top tier
priority; this measure seeks to address the needs of the most
vulnerable people within this population.

(12) Having counties provide mental health programming and
services is a benefit to the state.

begin insert 5849.2. end insert   

As used in this part, the following definitions shall
apply:

(a) “At risk of chronic homelessness” includes, but is not limited
to, persons who are at high risk of long-term or intermittent
homelessness, including persons with mental illness exiting
institutionalized settings, including, but not limited to, jail and
mental health facilities, who were homeless prior to admission,
transition age youth experiencing homelessness or with significant
barriers to housing stability, and others, as defined in program
guidelines.

(b) “Chronically homeless” has the same meaning as defined
in Section 578.3 of Title 24 of the Code of Federal Regulations,
as that section read on May 1, 2016.

(c) “Committee” means the No Place Like Home Program
Advisory Committee established pursuant to Section 5849.3.

(d) “County” includes, but is not limited to, a city and county.

(e) “Department” means the Department of Housing and
Community Development.

(f) “Development sponsor” has the same meaning as “sponsor”
as defined in Section 50675.2 of the Health and Safety Code.

(g) “Fund” means the No Place Like Home Fund established
pursuant to Section 5849.4.

(h) “Homeless” has the same meaning as defined in Section
578.3 of Title 24 of the Code of Federal Regulations, as that section
read on May 1, 2016.

(i) “Permanent supportive housing” has the same meaning as
“supportive housing,” as defined in Section 50675.14 of the Health
and Safety Code, except that “permanent supportive housing”
shall include associated facilities if used to provide services to
housing residents.

(j) “Program” means the process for awarding funds and
distributing moneys to applicants established in Sections 5849.7,
5849.8, and 5849.9.

(1) “Competitive program” means that portion of the program
established by Section 5849.8.

(2) “Distribution program” means that portion of the program
described in Section 5849.9.

(k) “Target population” means individuals or households as
provided in Section 5600.3 who are homeless, chronically
homeless, or at risk of chronic homelessness.

begin insert 5849.3. end insert   

(a) There is hereby established the No Place Like
Home Program Advisory Committee. Membership on the committee
shall be as follows:

(1) The Director of Housing and Community Development, or
his or her designee, who shall serve as the chairperson of the
committee.

(2) The Director of Health Care Services, or his or her designee,
and an additional representative.

(3) The Secretary of Veterans Affairs, or his or her designee.

(4) The Director of Social Services, or his or her designee.

(5) The Treasurer, or his or her designee.

(6) The chair of the Mental Health Services Oversight and
Accountability Commission, or his or her designee.

(7) A chief administrative officer of a small county or a member
of a county board of supervisors of a small county, as provided by
subdivision (d) of Section 5489.6, to be appointed by the Governor.

(8) A chief administrative officer of a large county or a member
of a county board of supervisors of a large county, as provided by
subdivision (b) of Section 5489.6, to be appointed by the Governor.

(9) A director of a county behavioral health department, to be
appointed by the Governor.

(10) An administrative officer of a city, to be appointed by the
Governor.

(11) A representative of an affordable housing organization, to
be appointed by the Speaker of the Assembly.

(12) A resident of supportive housing, to be appointed by the
Governor.

(13) A representative of a community mental health
organization, to be appointed by the Senate Rules Committee.

(14) A representative of a local or regional continuum of care
organization that coordinates homelessness funding, to be
appointed by the Governor.

(b) The committee shall do all of the following:

(1) Assist and advise the department in the implementation of
the program.

(2) Review and make recommendations on the department’s
guidelines.

(3) Review the department’s progress in distributing moneys
pursuant to this part.

(4) Provide advice and guidance more broadly on statewide
homelessness issues.

begin insert 5849.4. end insert   

(a) The No Place Like Home Fund is hereby created
within the State Treasury and, notwithstanding Section 13340 of
the Government Code, continuously appropriated to the department
for the purposes of this part. The department may use up to five
percent of the amount deposited in the fund for administrative
expenses in implementing this part.

(b) There shall be paid into the fund the following:

(1) Any proceeds from the issuance of bonds by the Treasurer
for the purpose of implementing the program.

(2) Any other federal or state grant, or from any private
donation or grant, for the purposes of this part.

(3) Any interest payment, loan repayments, or other return of
funds.

begin insert 5849.5. end insert   

(a) The department may adopt guidelines or
regulations, in consultation with the California State Association
of Counties and other stakeholders, as necessary to exercise the
powers and perform the duties conferred or imposed on it by this
part. Any guideline or regulation adopted pursuant to this section
shall not be subject to the requirements of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code). The
department shall consult with key stakeholders including, but not
limited to, counties.

(b) The department may adopt emergency regulations in order
to expedite the award of moneys pursuant to this part.

begin insert 5849.6. end insert   

For the purpose of administering Sections 5849.7 and
5849.8, the department shall organize counties into the following
competitive groupings based on population:

(a) The County of Los Angeles.

(b) Large counties with a population greater than 750,000.

(c) Medium counties with a population between 200,000 to
750,000.

(d) Small counties with a population less than 200,000.

The competitive program shall distribute funding among the
groupings based on a calculation made by the department that
shall include the number of homeless persons residing within each
county, as determined by the department, and considers minimum
funding levels necessary for a permanent supportive housing
development. The department, at its discretion, may consider other
factors in the calculation if it supports the objectives of this part.

begin insert 5849.7. end insert   

(a) The department shall administer a competitive
program, pursuant to Section 5849.8, and distribution program,
pursuant to Section 5849.9, for awarding a total of two billion
dollars ($2,000,000,000) among counties to finance capital costs
including, but not limited to, acquisition, design, construction,
rehabilitation, or preservation, and to capitalize operating
reserves, of permanent supportive housing for the target
population.

(b) For the competitive program established by Section 5849.8,
the following shall apply:

(1) A county may apply as the sole applicant if it is the
development sponsor or jointly with a separate entity as
development sponsor.

(2) Funded developments shall integrate the target population
with the general public.

(3) Funded developments shall utilize low barrier tenant
selection practices that prioritize vulnerable populations and offer
flexible, voluntary, and individualized supportive services.

(4) The guidelines may provide for alternative housing models,
such as shared housing models of fewer than five units. Integration
requirements may be modified in shared housing.

(5) Funds shall be offered as deferred payment loans to finance
capital costs including acquisition, design, construction,
rehabilitation, or preservation, and to capitalize operating reserves
of, permanent supportive housing for the target population.

(6) The department shall adopt guidelines establishing income
and rent standards.

begin insert 5849.8. end insert   

(a) One billion eight hundred million dollars
($1,800,000,000) shall be allocated from the fund for the purposes
of the competitive program. The department shall develop a
competitive application process for the purpose of awarding
moneys pursuant to this section. In considering applications, the
department shall do all of the following:

(1) Restrict eligibility to applicants that meet the following
minimum criteria:

(A) The county commits to provide mental health supportive
services and to coordinate the provision of or referral to other
services, including, but not limited to, substance use treatment
services, to the tenants of the supportive housing development for
at least 20 years. Services shall be provided onsite at the supportive
housing development or in a location otherwise easily accessible
to tenants. The county may use, but is not restricted to using, any
of the following available funding sources as allowed by state and
federal law:

(i) The Local Mental Health Services Fund established pursuant
to subdivision (f) of Section 5892.

(ii) The Mental Health Account within the Local Health Welfare
Trust Fund established pursuant to Section 17600.10.

(iii) The Behavioral Health Subaccount within the County Local
Revenue Fund 2011 established pursuant to paragraph (4) of
subdivision (f) of Section 30025 of the Government Code.

(iv) Funds received from other private or public entities.

(v) Other county funds.

(B) The county has developed a county plan to combat
homelessness, which includes a description of homelessness
countywide, any special challenges or barriers to serving the target
population, county resources applied to address the issue, available
community-based resources, an outline of partners and
collaborations, and proposed solutions.

(C) Meet other threshold requirements including, but not limited
to, developer capacity to develop, own, and operate a permanent
supportive housing development for the target population,
application proposes a financially feasible development with
reasonable development costs.

(2) The department shall evaluate applications using, at
minimum, the following criteria:

(A) The extent to which units assisted by the program are
restricted to persons who are chronically homeless or at risk of
chronic homelessness within the target population.

(B) The extent to which funds are leveraged for capital costs.

(C) The extent to which projects achieve deeper affordability
through the use of non-state project-based rental assistance,
operating subsidies, or other funding.

(D) Project readiness.

(E) The extent to which applicants offer a range of on and
off-site supportive services to tenants, including mental health
services, behavioral health services, primary health, employment,
and other tenancy support services.

(F) Past history of implementing programs that use
evidence-based best practices that have led to the reduction of the
number of chronic homeless or at risk of chronic homelessness
individuals within the target population.

(b) The department may establish an alternative process for
allocating funds directly to counties, as calculated in Section
5849.6, with at least five percent of the state’s homeless population
and that demonstrate the capacity to directly administer loan funds
for permanent supportive housing serving the target population
and the ability to prioritize individuals with mental health
supportive needs who are homeless or at risk of chronic
homelessness, consistent with this part and as determined by the
department. The department shall adopt guidelines establishing
the parameters of an alternative process, if any, and requirements
for local administration of funds, including, but not limited to,
project selection process, eligible use of funds, loan terms, rent
and occupancy restrictions, provision of services, and reporting
and monitoring requirements. Counties participating in the
alternative process shall not be eligible for the competitive process
and shall be limited to funds in proportion to their share of the
percentage of the statewide homeless population, as calculated by
the department in Section 5849.6. Funds not committed to
supportive housing developments within two years following award
of funds to counties shall be returned to the state for the purposes
of the competitive program. The department shall consider the
following when selecting participating counties:

(1) Demonstrated ability to finance permanent supportive
housing with local and federal funds, and monitor requirements
for the life of the loan.

(2) Past history of delivering supportive services to the target
population in housing.

(3) Past history of committing project-based vouchers to
supportive housing.

(4) Ability to prioritize the most vulnerable within the target
population through coordinated entry system.

(c) The department shall set aside 8 percent of funds offered in
Rounds 1 through 4, inclusive, for small counties as provided in
subdivision (d) of Section 5849.6.

(d) The department shall award funds in at least four rounds
as follows:

(1) The department shall issue its first request for proposal for
the competitive program no later than 180 days after any deadline
for appeals as set forth in Section 870 of the Code of Civil
Procedure.

(2) The second round shall be completed no later than one year
after the completion of the first round.

(3) The third round shall be completed no later than one year
after the completion of the second round.

(4) The fourth round shall be completed no later than one year
after the completion of the third round.

(5) Subsequent rounds shall occur annually thereafter in order
to fully exhaust remaining funds and the department may
discontinue the use of the competitive groupings in Section 5849.6,
the alternative process in subdivision (b) for any funds not awarded
by the county, and the rural set aside funds as set forth in
subdivision (c).

(e) (1) Any loans made by the department pursuant to this
section shall be in the form of secured deferred payment loans to
pay for the eligible costs of development. Principal and
accumulated interest is due and payable upon completion of the
term of the loan, which shall be established through program
guidelines adopted pursuant to Section 5849.5. The loan shall
bear simple interest at a rate of three percent per annum on the
unpaid principal balance. The department shall require annual
loan payments in the minimum amount necessary to cover the costs
of project monitoring. For the first 15 years of the loan term, the
amount of the required loan payments shall not exceed forty-two
hundredths of 1 percent per annum.

(2) The department may establish maximum loan-to-value
requirements for some or all of the types of projects that are
eligible for funding under this part, which shall be established
through program guidelines adopted pursuant to Section 5849.5.

(3) The department shall establish per-unit and per-project loan
limits for all project types.

(f) (1) The department may designate an amount not to exceed
four percent of funds allocated for the competitive program, not
including funding allocated pursuant to subdivision (b), in order
to cure or avert a default on the terms of any loan or other
obligation by the recipient of financial assistance, or bidding at
any foreclosure sale where the default or foreclosure sale would
jeopardize the department’s security in the rental housing
development assisted pursuant to this part. The funds so designated
shall be known as the “default reserve.”

(2) The department may use default reserve funds made
available pursuant to this section to repair or maintain any rental
housing development assistance pursuant to this part to protect
the department’s security interest.

(3) The payment or advance of funds by the department pursuant
to this subdivision shall be exclusively within the department’s
discretion, and no person shall be deemed to have any entitlement
to the payment or advance of those funds. The amount of any funds
expended by the department for the purposes of curing or averting
a default shall be added to the loan amount secured by the rental
housing development and shall be payable to the department upon
demand.

(g) (1) Prior to disbursement of any funds for loans made
pursuant this section, the department shall enter into a regulatory
agreement with the development sponsor that provides for all of
the following:

(A) Sets standards for tenant selection to ensure occupancy of
assisted units by eligible households of very low and low income
for the term of the agreement.

(B) Governs the terms of occupancy agreements.

(C) Contains provisions to maintain affordable rent levels to
serve eligible households.

(D) Provides for periodic inspections and review of year-end
fiscal audits and related reports by the department.

(E) Permits a developer to distribute earnings in an amount
established by the department and based on the number of units
in the rental housing development.

(F) Has a term for not less than the original term of the loan.

(G) Contains any other provisions necessary to carry out the
purposes of this part.

(2) The agreement shall be binding upon the developer and
successors in interest upon sale or transfer of the rental housing
development regardless of any prepayment of the loan.

(3) The agreement shall be recorded in the office of the county
recorder in the county in which the real property subject to the
agreement is located.

begin insert 5849.9. end insert   

(a) In addition to the competitive program established
by Section 5849.8, the department shall distribute two hundred
million dollars ($200,000,000) from the fund on an
“over-the-counter” basis to finance the construction,
rehabilitation, or preservation, and to capitalize operating
reserves, of permanent supportive housing for individuals in the
target population with a priority for those with mental health
supportive needs who are homeless or at risk of chronic
homelessness. Funds to be awarded pursuant to this section shall
be available to all counties within the state proportionate to the
number of homeless persons residing within each county as
calculated in Section 5849.6 or in the amount of five hundred
thousand dollars ($500,000), whichever is greater.

(b) Funds not awarded within 18 months following the first
allocation of moneys in accordance with subdivision (d) shall be
used for the purposes of the competitive program.

(c) The moneys described in subdivision (a) shall be
administered either in accordance with the procedures for
awarding funds to local agencies established by the existing Mental
Health Services Act housing program administered by the
Department of Health Care Services and the California Housing
Finance Agency or alternative procedures developed by the
department for distributing these moneys that enhance the
efficiency and goals of the distribution program.

(d) The department shall make the first allocation of moneys
pursuant to this section no later than 60 days after any deadline
for appeals as set forth in Section 870 of the Code of Civil
Procedure.

begin insert 5849.10. end insert   

(a) The sum of six million two hundred thousand
dollars ($6,200,000) is hereby appropriated from the Mental
Health Services Fund to the department to provide technical and
application preparation assistance to counties.

(b) Eligible use of technical and application preparation
assistance shall include, but is not limited to, assistance in
performing one or more of the following activities:

(1) Applying for program funds.

(2) Implementing activities funded by moneys distributed
pursuant to this part, including the development of supportive
housing for the target population.

(3) Coordinating funded activities with local homelessness
systems, including coordinated access systems developed pursuant
to Section 578.7(a)(8) of Title 24 of the Code of Federal
Regulations, as that section read on May 1, 2016.

(4) Delivering a range of supportive services to tenants.

(5) Collecting data, evaluating program activities, and sharing
data among multiple systems, such as the Mental Health Services
Act, enacted by Proposition 63 at the November 2, 2004, statewide
general election, the Medi-Cal Act (Chapter 7 (commencing with
Section 14000) of Part 3 of Division 9) and implementing
regulations, and homelessness systems.

(c) The department shall provide funds to a county upon
application as follows:

(1) To a large county and to the County of Los Angeles, the
department shall provide one hundred fifty thousand dollars
($150,000).

(2) To a medium county, the department shall provide one
hundred thousand dollars ($100,000).

(3) To a small county, the department shall provide seventy-five
thousand dollars ($75,000).

(d) If a county does not expend the moneys allocated pursuant
to subdivision (c) by June 30, 2020, those moneys shall be used to
augment the funding pursuant to subdivision (e).

(e) The department may contract for expert technical assistance
and application preparation assistance. The department shall
deploy such assistance to counties based upon a process to be
defined in guidelines.

(f) The department may establish a unit for the purpose of
providing technical assistance to counties.

begin insert 5849.11. end insert   

(a) The counties shall annually report to the
department on activities funded under this part, including
information on the funded supportive housing development.
Reported information shall include location of projects, number
of units assisted, occupancy restrictions, number of individuals
and households served, related income levels, and homeless,
veteran, and mental health status.

(b) The department shall submit a report on the program to the
Legislature by December 31 of each year, commencing with the
year after the first full year in which the program is in effect. The
report shall contain the following:

(1) The processes established for distributing funds.

(2) The distribution of funds among counties.

(3) Any recommendations as to modifications to the program
for the purpose of improving efficiency or furthering the goals of
the program.

(c) The report required to be submitted by subdivision (b) shall
be submitted in compliance with Section 9795 of the Government
Code.

begin insert 5849.12. end insert   

(a) Upon an appropriation of funds for the purpose
of this section, the department shall contract with a public or
private research university in this state to evaluate the program.
The department shall develop the research design and issue a
request for proposal for a contract for the evaluation, with the
assistance of the Legislative Analyst’s Office and the Department
of Finance.

(b) The department shall submit the final research design and
request for proposal required by subdivision (a) to the Chairperson
of the Joint Legislative Budget Committee no more than 30 days
prior to executing a contract for the evaluation.

begin insert 5849.13. end insert   

An action to determine the legality of any action by
the department pursuant to this part may be brought pursuant to
Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of
the Code of Civil Procedure.

begin insert 5849.14. end insert   

The Department of Finance may authorize a loan
from the General Fund to the No Place Like Home Fund for
cashflow purposes in an amount not to exceed one million dollars
($1,000,000) subject to the following conditions:

(a) The loan is to allow the department to begin program
implementation activities, including, but not limited to, drafting
program guidelines and regulations.

(b) The loan is short term, and shall be repaid within 30 days
after the deposit of bond proceeds into the fund pursuant to
paragraph (1) of subdivision (b) of Section 5849.4.

(c) Interest charges may be waived pursuant to subdivision (e)
of Section 16314 of the Government Code.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 5897 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

5897.  

(a) Notwithstanding any other provision of state law,
the State Department of Health Care Services shall implement the
mental health services provided by Part 3 (commencing with
Section 5800), Part 3.6 (commencing with Section 5840), and Part
4 (commencing with Section 5850) through contracts with county
mental health programs or counties acting jointly. A contract may
be exclusive and may be awarded on a geographic basis. For
purposes of this section, a county mental health program includes
a city receiving funds pursuant to Section 5701.5.

(b) Two or more counties acting jointly may agree to deliver or
subcontract for the delivery of those mental health services. The
agreement may encompass all or any part of the mental health
services provided pursuant to these parts. Any agreement between
counties shall delineate each county’s responsibilities and fiscal
liability.

(c) The department shall implement the provisions of Part 3
(commencing with Section 5800), Part 3.2 (commencing with
Section 5830), Part 3.6 (commencing with Section 5840), and Part
4 (commencing with Section 5850) through the annual county
mental health services performance contract, as specified in Chapter
2 (commencing with Section 5650) of Part 2.

begin insert

(d) The department shall conduct program reviews of
performance contracts to determine compliance. Each county
performance contract shall be reviewed at least once every three
years, subject to available funding for this purpose.

end insert begin delete

(d)

end delete

begin insert (e) end insert  When a county mental health program is not in compliance
with its performance contract, the department may request a plan
of correction with a specific timeline to achieve improvements.

begin insert The department shall post on its website any plans of correction
requested and the related findings. end insert

begin delete

(e)

end delete

begin insert (f) end insert  Contracts awarded by the State Department of Health Care
Services, the State Department of Public Health, the California
Mental Health Planning Council, the Office of Statewide Health
Planning and Development, and the Mental Health Services
Oversight and Accountability Commission pursuant to Part 3
(commencing with Section 5800), Part 3.1 (commencing with
Section 5820), Part 3.2 (commencing with Section 5830), Part 3.6
(commencing with Section 5840), Part 3.7 (commencing with
Section 5845), Part 4 (commencing with Section 5850), and Part
4.5 (commencing with Section 5890), may be awarded in the same
manner in which contracts are awarded pursuant to Section 5814
and the provisions of subdivisions (g) and (h) of Section 5814 shall
apply to those contracts.

begin delete

(f)

end delete

begin insert (g) end insert  For purposes of Section 14712, the allocation of funds
pursuant to Section 5892 which are used to provide services to
Medi-Cal beneficiaries shall be included in calculating anticipated
county matching funds and the transfer to the State Department
of Health Care Services of the anticipated county matching funds
needed for community mental health programs.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 5899 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

5899.  

(a) The State Department of Health Care Services, in
consultation with the Mental Health Services Oversight and
Accountability Commission and the County Behavioral Health
Directors Association of California, shall develop and administer
instructions for the Annual Mental Health Services Act Revenue
and Expenditure Report. begin insert The instructions shall include a
requirement that the county certify the accuracy of this report. end insert
This report shall be submitted electronically to the department and
to the Mental Health Services Oversight and Accountability
Commission. begin insert The department and the commission shall annually
post each county’s report on its website in a timely manner. end insert

begin insert

(b) The department, in consultation with the commission and
the County Behavioral Health Directors Association of California,
shall revise the instructions described in subdivision (a) by July
1, 2017, and as needed thereafter, to improve the timely and
accurate submission of county revenue and expenditure data.

end insert begin delete

(b)

end delete

begin insert (c) end insert  The purpose of the Annual Mental Health Services Act
Revenue and Expenditure Report is as follows:

(1) Identify the expenditures of Mental Health Services Act
(MHSA) funds that were distributed to each county.

(2) Quantify the amount of additional funds generated for the
mental health system as a result of the MHSA.

(3) Identify unexpended funds, and interest earned on MHSA
funds.

(4) Determine reversion amounts, if applicable, from prior fiscal
year distributions.

begin delete

(c)

end delete

begin insert (d) end insert  This report is intended to provide information that allows
for the evaluation of all of the following:

(1) Children’s systems of care.

(2) Prevention and early intervention strategies.

(3) Innovative projects.

(4) Workforce education and training.

(5) Adults and older adults systems of care.

(6) Capital facilities and technology needs.

begin insert

(e) If a county does not submit the annual revenue and
expenditure report described in subdivision (a) by the required
deadline, the department may withhold MHSA funds until the
reports are submitted.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert begin insert

The Legislature finds and declares that this act furthers
the intent of the Mental Health Services Act, enacted by Proposition
63 at the November 2, 2004, statewide general election.

end insert begin insert

It is intent of the Legislature that the costs to service the debt
for the bond authorized by this act shall not impede in any way
the direct mental health services provided by counties, and that
the counties shall maximize the use of all available state, federal,
and local funding sources, including those listed in Section 5849.7
of the Welfare and Institutions Code, to support direct local mental
health services.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert begin insert

This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes, relating to the Budget Act of 2016.

end delete